the spectre of permanent economic divergence between members. and insofar as this threatens the essential cohesion of the union, this has potentially damaging consequences for all emu members. seen from this perspective, euro area countries cannot be agnostic about whether and how others address their reform challenges. their own prosperity ultimately depends on each country putting itself in a position to thrive within the union. and for this reason, there is a strong case for sovereignty over relevant economic policies to be exercised jointly. that means above all structural reforms. this was the starting point for the reflection that began with the four presidents ’ report in 2012 on building a genuine economic union for the euro area. and to my mind, deepening economic union would mean two things. first, in the short - term, using more effectively the rules and procedures we already have, such as the european semester. this means making all parties more accountable for see speech by b. cœure on “ structural reforms : learning the right lessons from the crisis ”, at the bank of latvia economic conference 2014, riga, 17 october 2014. world economic forum ( 2014 ), the global competitiveness report 2014 – 15, geneva, world economic forum. bis central bankers ’ speeches ensuring that recommendations are well - targeted, closely monitored and followed up. and it means actively using the corrective tools that are there to tackle large imbalances, such as the excessive imbalances procedure. second, over the longer - term, acknowledging the community of interest and the reality of spillovers in the form of a real sharing of sovereignty in the governance of structural reforms. that is, shifting from coordination to common decision - making, and from rules to institutions. private risk - sharing through integrated financial markets as i said, however, economies will never be so flexible that adjustment happens as quickly as if they had their own exchange rate. there will always be short - term costs. and so to ensure that countries are better off being in the union when a shock hits than they would be outside, we need other ways to help spread those costs. in a monetary union like ours, there is a particular onus on private risk - sharing to play this role. indeed, the less public risk - sharing we want, the more private risk - sharing we need. private risk - sharing chiefly comes through a well - integrated financial system. diversified portfolios make balance sheets more resilient to local shocks and allow the effects of those shocks to be dispersed across countries.

mr noyer ’ s overview on the relationship between politics and central banks speech by mr christian noyer, vice - president of the european central bank, on the relationship between politics and central banks to the estonian central bank at tallinn, estonia on 3 may 1999. introduction ladies and gentlemen : it is a pleasure to be here today. first of all, i should like to congratulate the estonian central bank on its 80th birthday. this also suggests that i should be modest, speaking as a representative of a central bank which is not even one year old. i am particularly delighted to be addressing the topic of politics and central banks, since this is one of the basic issues in central banking. i should like to explain to you why i think independence from day - to - day politics is crucial for a successful central bank and how this has been achieved in the case of the european central bank ( ecb ). however, independence should not mean isolation. a more open and transparent central bank is more effective. moreover, in a democratic society accountability for policies is the logical complement to independence. in this context, i shall address the issue of how we pursue our aim to be as open, transparent and responsible as possible. i shall conclude with a brief discussion of the relationship between the monetary and fiscal authorities. independence as a cornerstone of central banking recently there has been a world - wide tendency to grant independence to central banks. this tendency is evidenced by both practical experience and academic research. by shielding monetary policy decisions from political interference, lower inflation can be maintained without having to give up economic growth. indeed, in that sense, creating an independent central bank appears to be a good thing all round. the reason for this is that monetary policy - making under the influence of politicians tends to focus too much on short - term considerations. this can easily lead to temporary, nonsustainable accelerations in economic activity, at the expense of lasting increases in inflation and also ultimately a curbing of economic output and increases in unemployment. politicians all over the world have come to realise this and have decided to remove the temptation to pursue short - term gains - like ulysses, who asked to be roped to the mast in order to resist the temptation of the sirens ’ song - and to make their central bank independent. it should be underlined that granting this independence is, as it should be, a political decision. an independent central bank needs a clear legal mandate. the ecb is one of the most, if not