the regulations of 28 countries when exporting across the union. second, it would incentivise countries to put in place efficient and well - functioning legislation. in addition, the single market for services should be expanded to additional sectors : there is, for instance, no good economic reason for excluding health care. as i said earlier, reforms are also about improving economic governance. when the first european semester was launched in january 2011, it marked a sea change in the economic governance of the euro area. with this new tool, europe recognised that ex ante coordination of economic policies – and not only fiscal policies – at european level was necessary. later in the same year, the macroeconomic imbalance procedure ( mip ) strengthened the european semester further. for the euro area, the corrective arm of the mip even foresees sanctions in case of non - compliance. the european semester and the mip are powerful tools that no doubt have made the euro area stronger. yet – five years later – we have to admit that the sun does not shine everywhere. the implementation record for country - specific recommendations ( csrs ) was not very high from the start and has declined further recently. in 2015 only 4 % of csrs were fully implemented, down from 7 % in 2014. in some countries excessive economic imbalances bis central bankers ’ speeches persist and could harm other member states. more can be done to improve national implementation and i see a lot of merit in the imf's proposal that csrs should be linked to outcome - based benchmarks that are concrete, measurable, and clearly linked to the ultimate reform objective [ 28 ]. the dismal implementation record of the csrs nevertheless suggests that a governance framework that envisages european economic policy priorities being legitimised and implemented at national level has its limits. looking forward, we will need to engage in a process at european level, based on shared institutions, that provides both economic resilience and the appropriate legitimacy. in such a process, consensus would be needed on ( i ) the policy areas that are crucial to preserve the resilience of the euro area, and on ( ii ) designating those policy areas as shared competences with democratic legitimisation at european level. and as i have said before, getting there will require both economic and political convergence. the success of the single market is one of the few uncontroversial achievements of the eu. it has shown that shared competences

significant corrections if events trigger a change in investors ’ assessment of risk. particularly, a revision concerning future inflation, no matter how unlikely, could lead to significant increases in term premia and higher yields. 9 / 20 bis central bankers'speeches nevertheless, taking into account the present market configuration and modelling fair value valuations, excess corporate bond premia in the euro area cannot be detected ( figure 10, rhs ). the excess bond premium is given by the deviation of the corporate credit spreads relative to the measured default risk of the issuer and the duration risk of the bond. the estimates show that ‘ excess premia ’ have declined since end - 2015 and are currently negative, implying that investors require no premium to hedge against adverse economic scenarios. 10 / 20 bis central bankers'speeches looking now to another asset class, our analysis indicates that on the aggregate, residential property prices are broadly in line with the fundamentals, using various different methods to assess whether there are overvaluations in the market ( see figure 11 ). the situation is different in the case of commercial real estate. in specific areas and large cities, housing prices have however increased at a faster pace than households ’ incomes and may show signs of overvaluation. 11 / 20 bis central bankers'speeches on the other hand, property prices and transaction volumes have grown strongly in recent years and have already reached historical highs in many euro area countries ( see figure 12 ). nominal growth of residential property prices accelerated to around 4 % y - o - y in q1 2017 but remained below its historical average growth rate and well below pre - crisis values. in real terms, price increases moderated due to inflation picking up. residential property prices are demand - driven and increasingly supported by the recovery in personal income which is expected to continue. 12 / 20 bis central bankers'speeches potential impact of asset price shocks the analysis of the situation in different asset markets illustrates that generalised overvaluation does not exist in the euro area. tensions in some real estate markets are being dealt with by macroprudential instruments in many countries. to assess possible financial stability risks we should however try to gauge the possible impact of the materialisation of an interest rate or yields correction. in the following paragraphs, i will explore the effects of such a shock calibrated at 100 basis points. estimates suggest that the impact of this sizable increase on the non - financial private sector is relatively small, in particular for euro area households ( see figure 13, l