see with the divergence in the euro area today. this creates an uncertain half - way position. we have now integrated too much to even entertain reversing the process – our economies are far too intertwined. but we have not yet converged enough to dispel doubts about the cohesion of our union and guarantee its longterm stability. so there is only one answer : we have to make our economies more convergent than they are today. and it is in this context that structural reforms are so important. only with those reforms can we create the conditions where every country can allocate resources efficiently, exploit comparative advantages and grow. and i do not say this from theory, but from our own experience. we have already seen in the euro area that convergence cannot be sustained if it is not structurally anchored. we had rapid convergence in nominal gdp levels before the crisis, but driven by demand and without an underlying alignment in productivity levels. when the cycle turned, those nominal gains largely reversed. moreover, we are seeing now how convergence can gradually restart when the right structural policies are in place. those countries that undertook reforms in recent years are starting to see the positive effects come through. for example, the oecd estimates that the 2012 labour market reform – and in particular the decentralisation of wage bargaining – was responsible for a 3. 2 % decline in labour costs in the business sector up to the second quarter of 2013, a period where spain was also able to gain large export market shares. in portugal, well targeted and efficient active labour market policies have been able to explain about one - third of the employment recovery. and the fact we now have an extremely accommodative monetary policy is not a disincentive for countries to continue with these reforms. for example, italy has introduced a major labour bis central bankers ’ speeches market reform since the ecb announced its most recent measures. in fact, monetary policy creates an incentive for reform. any country that does structural reforms today will see the benefits materialise faster, as those reforms will strengthen the impact of monetary policy in their economy, in particular where there is pent - up investment demand. and this in turn will make further structural reforms easier, as in a stronger economy the short - term costs of reform are lower – for instance because transitions between jobs are faster and there is less risk of hysteresis effects. 2. from rules to institutions still, what adds fragility to our union is the

mario draghi : speech by the president at sz finance day 2015 speech by mr mario draghi, president of the european central bank, at sz ( suddeutsche zeitung ) finance day 2015, frankfurt am main, 16 march 2015. * * * summary europe needs to accelerate on its way to economic and institutional convergence. due to falling oil prices, accommodative monetary policy and successful structural reforms, we can be optimistic about the economic outlook. the nascent recovery should be used as a window of opportunity to go ahead with reforms that make the euro area less fragile and vulnerable to shocks. economic convergence should be reached through structural reforms that lead to an alignment of productivity levels. on the institutional side, we need to move from a system of rules and guidelines for national economic policy making to a system of further sovereignty sharing within common institutions. as part of this process, we need to strengthen the democratic accountability of europe towards its citizens. * * * ladies and gentlemen, it is a pleasure to be here this evening and to be able to address this conference. we are meeting against the backdrop of a steadily recovering economic situation in the euro area. most indicators suggest a sustained recovery is taking hold. confidence among firms and consumers is rising. growth forecasts have been revised upwards. and bank lending is improving on both the demand and supply sides. these improvements reflect the coming together of several external and internal factors. first, the terms of trade gains for firms and households arising from falling oil prices. second, the monetary policy measures taken by the ecb since the middle of last year, which have led to a significant easing of financing conditions and protected the euro area from second round effects from this oil price drop, thus amplifying its benefits. and third, the successful structural reforms that have been implemented in several countries in recent years, which are now starting to produce results. these effects look set to persist for some time, meaning we can rightly be optimistic about the outlook. but this does not mean we should rest on our laurels. on the contrary, a nascent recovery provides us with a window of opportunity – with the conditions to press ahead with the reforms that will make the euro area less fragile and vulnerable to shocks. these vulnerabilities will not disappear just because the cycle is turning. they stem from the fact that our union remains incomplete along two dimensions. neither our economies nor our institutions have converged enough. this is why whenever there is a serious shock