christine lagarde : opening remarks at the eui ’ s state of the union event opening remarks by ms christine lagarde, president of the european central bank, at the online edition of the state of the union conference organised by the european university institute, 8 may 2020. * * * today marks the 75th anniversary of the end of the second world war in europe, while tomorrow marks the 70th anniversary of europe ’ s response to that cataclysm : the schuman declaration that set us on the path towards deeper european union. the declaration famously maintained that “ europe will not be made all at once, or according to a single plan. it will be built through concrete achievements which first create a de facto solidarity. ” schuman ’ s idea was that europe needed to become so deeply integrated – and so interdependent – that solidarity would become self - interest. and, thereafter, it would become natural to build stronger common institutions that reflected the depth of those ties. by and large, this is the path that integration has followed. when europeans saw that the common market was not delivering in the 1980s, we launched the single market. when we realised the single market was vulnerable to competitive devaluations, we launched the euro. and when the euro members recognised that the single currency was vulnerable to self - fulfilling crises, new institutions were established and new instruments were developed – such as the european stability mechanism ( esm ), the ecb ’ s outright monetary transactions programme ( omt ), and the banking union that still needs to be completed. whenever our “ concrete achievements ” were threatened, we did not backtrack : we made them stronger – because they had created the de facto solidarity that schuman promised. european integration paved the way for prosperity, stability and peace. the coronavirus pandemic today is both confirming and testing this thesis. we are seeing once more how interdependent we have become. if not all countries are cured from this crisis, the others will suffer – and not just in terms of health, but economically too. trade within the euro area accounts for 45 % of gdp. the success of the single market means that supply chain integration is three times tighter within the euro area than with the rest of the world. as a result, analysis by the ecb finds that a common shock is amplified by about 30 % – meaning all countries have to act together to mitigate large crises effectively. so the question we face today is

##ability of labour markets and increasing competition in the markets for goods and services, will also enhance the effectiveness of monetary policy in maintaining price stability and minimise output volatility in response to adverse price shocks. the need to proceed with structural reforms fully applies to european financial integration. financial markets that are not yet fully integrated have a potential to increase economic growth which must be exploited. for example, a study estimates the potential resulting from the integration of european bond and equity markets in terms of additional gdp growth at around 1 % over a ten - year period, or approximately eur 100 billion. 2 moreover, the 311 million people in the euro area, or, more generally, the 459 million citizens of the european union, expect europe to deliver such economic benefits. as a central banker, i am very conscious of the fact that the implementation of structural reforms which increase the economic potential of the euro area also facilitates the conduct of monetary policy. to summarise, enhanced european financial integration increases the potential for greater and more sustained non - inflationary economic growth. i now turn to the links between financial integration and financial stability. the task of contributing to the safeguarding of financial stability is provided for in the treaty establishing the european community. the ecb provides the outcome of its monitoring of euro area - wide financial stability in its financial stability review that is made available to the public. our latest report was published just one week ago. 3 let me first make some general remarks about the task to assess the stability of the financial system. although, like it is the case for monetary policy assessment, there is not yet a widely accepted, rigorous framework that summarises developments in financial stability in a single quantitative measure, many of the financial stability assessments that are undertaken by a growing number of central banks around the world are based on a broad and forward - looking notion of financial stability. 4 financial stability is often seen from the perspective of the avoidance of financial crises, but it has a larger dimension. financial system stability requires the financial system ’ s principal components – financial markets, the related market infrastructures, and financial institutions – to be jointly capable of london economics ( 2002 ), “ quantification of the macro - economic impact of integration of eu financial markets ”, report to the european commission. the december 2005 ecb financial stability review, published on 8 december 2005, is available from the ecb ’ s website at http : / / www. ecb. int / pub / pdf / other / financial