benoit cœure : the role of the european union in fostering convergence speech by mr benoit cœure, member of the executive board of the european central bank, at the conference on european economic integration ( ceei ), vienna, 26 november 2018. * * * this1 conference was renamed 14 years ago to reflect the “ growing together of europe ”. 2 in my remarks today i would like to focus precisely on these three topics : growth, europe and togetherness. i will argue that these three elements are needed to accomplish what the treaty on european union promises : economic and social cohesion. 3 i will focus my remarks today on the economies of central, eastern and south - eastern europe ( cesee ), covering both those that are already part of the european union ( eu ) and those that are eu candidate countries or potential candidates. 4 i will start with a brief review of the current state of convergence of cesee economies, and then explain how three key european policy areas – the completion of the single market, the launch of a true capital markets union and the targeted use of eu funds – can help accelerate convergence and thereby also foster cohesion in europe. the current state of convergence cesee economies have seen significant improvements in living standards over the past two decades, in both absolute and relative terms. 5 since 2000, growth in real gdp per capita has averaged 3. 8 % in the region as a whole, compared with 1. 4 % for the eu - 28. as a result, we have seen these economies make measurable and welcome progress in catching up to the eu average. 6 but this catching - up process has been neither linear over time nor homogeneous across countries. you can see this on my first slide. 1 / 16 bis central bankers'speeches clearly, for most countries, convergence towards the eu - 28 average has practically stalled since the outbreak of the financial crisis in 2008 – this is the difference between the yellow dot and the upper end of the blue bar. and before the crisis, convergence was noticeably faster in economies that were already part of the euro area. in many of these economies, relative living standards increased by half, from 40 to 50 % of the eu average in 2000, to around 70 % in 2016. but the further one moves to the right on this slide, and contrary to what neoclassical growth theory would suggest, the less compelling strong convergence becomes. in the western balkans, for example, while relative income levels have increased, they have done so at

the international community differ depending on the eurosystem tasks involved in international relations. in particular, the ecb can play three different roles. first, the ecb is a primary and autonomous counterpart whenever the eurosystem ’ s exclusive competencies - ie monetary policy and related central banking tasks - are involved in international relations. second, with regard to issues related to the exchange rate of the euro, the ecb shares with the ecofin council the responsibility for both consultations with third parties - for example at g7 level - and communication to the general public. however, the ecb is solely responsible for deciding foreign exchange operations. third, within the limits of the eurosystem ’ s field of competence, the ecb can advise other euro area policymakers on international issues. in specific circumstances the ecb may also act as a “ catalyst for cooperation ”. this may happen when the eurosystem develops common views on issues which fall within the competence of other euro area authorities ( mainly national governments ), but in which the eurosystem has a strong institutional interest, in accordance with its statute. this applies, for instance, to issues related to the stability of the global financial markets and the architecture of the international monetary system. in dealing with these issues, the ecb may provide value added to the development of common euro area positions to be taken at the international level. rationale for cooperation the relations of the ecb with other policymakers at the international level involve a number of cooperation activities designed to increase the “ joint welfare ” resulting from their policies. generally speaking, “ international cooperation ” takes place within the relevant organisations ( eg imf ) and fora ( eg g7 ), between the competent authorities of different countries for either a given policy ( eg monetary policy ) or a set of policies ( eg macroeconomic policies ). in this context, the term “ country ” should be understood to include monetary unions such as the euro area. in principle, cooperation can include a wide spectrum of activities, namely : • consultation, which simply consists of a mutual exchange of information and views ; • surveillance, ie the systematic monitoring and assessment, by an independent organisation, of the economic policies of its members. within this context, the international community may also develop “ standards ” and “ codes ”, which constitute a form of multilateral rule - making to be implemented on a voluntary basis ; and • coordination, ie the agreement between separate policymakers to take and implement joint