with hitting the lower bound. third, there are arguably better ways of reducing risks associated with the effective lower bound than a higher inflation objective. in particular, congress could increase the size and scope of the automatic fiscal stabilizers that support economic activity and income during economic downturns. for example, congress could enact legislation in which employment payroll taxes would be automatically reduced when the unemployment rate rose above a particular threshold. with such stabilizers in place, households and businesses would anticipate additional income support in the face of a cyclical downturn. this approach would be more powerful than discretionary fiscal actions that carry a greater degree of uncertainty. another option to help better anchor inflation expectations around the current objective would be to move to a price - level targeting, or plt, regime. under the current inflation targeting regime, the fomc follows a “ bygones are bygones ” policy : misses of the inflation objective on one side are not deliberately offset by subsequent misses on the other. therefore, when inflation runs persistently below the objective, policymakers do not strive to push inflation above the objective in the future. under these conditions, the risk is that inflation expectations will become unanchored to the downside. in contrast, under a price - level targeting regime, the fomc would commit to make up any shortfalls below its 2 percent objective by allowing inflation to climb above the objective for the time necessary to eliminate the shortfall. this commitment to offsetting the period of below - target inflation with a period of above - target inflation would, presumably, help keep inflation expectations from becoming unanchored to the downside. however, a symmetric plt regime — in which misses have to be made up on both sides of the inflation objective — has an important shortcoming. compensating for inflation overshoots by deliberately keeping inflation below the fomc ’ s 2 percent objective would increase the risk of getting pinned at the effective lower bound for interest rates. as a consequence, some — including former chairman ben bernanke — have proposed adopting an asymmetric plt regime. in such a system, misses below the objective would be offset by misses above only when the effective lower bound was binding. under normal circumstances, misses above the objective would not be offset. rather, they would be treated as “ bygones, ” as is currently the case. 14 however, i suspect that establishing a modified plt regime would present some challenges. first,

corollary to the confidence that investors place in our currency, and which can be measured by the decrease in long - term interest rate spreads vis - a - vis germany, amounting to between – 1. 5 % for france and – 3. 7 % for italy. third, internal exchange rate stability, and a greater international role. today, the euro accounts for 20 % of international reserves, second only to the dollar. and an internationally recognised currency generates economic gains : financial markets are more attractive to domestic and foreign investors, more liquid, and thus more efficient. but it also carries a political weight : when mario draghi speaks at the g20, the whole world listens to what europe has to say. 2. yet, despite the success of monetary union, europe ’ s economy is now confronted with a new trilemma. weaknesses have materialised. addressing people ’ s expectations requires identifying the flaws of our union in an open and honest manner. regarding growth, we must distinguish between the snapshot of the present and the full movie that we have lived through. the present snapshot is positive : euro area growth is accelerating, and is now up to speed with the united states or the united kingdom. however, this is not sufficient to make up the cumulative shortfall of past years : the full movie until today is that since 2011, the cumulated eu growth trajectory is 7. 5 gdp points below the us ’. even when measured per capita, this underperformance amounts to 5 percentage points. and we see the same contrast regarding convergence between countries. the present snapshot, which is positive, shows that intra - area divergences have been significantly reduced and are at their lowest level since 1999. but the full movie up to today 3 / 8 bis central bankers'speeches shows rather wider disparities in income per capita, as a result of the 2009 – 2012 crises. to make matters worse, all too often, member states tend to act in isolation, not taking into account the externalities and the impact that their policies have on others. this leads to a collective suboptimal situation : according to a study by banque de france staff7, the opportunity cost of not sufficiently coordinating our fiscal policies in the aftermath of the crisis may have amounted to 1 to 2 gdp points in the euro area. moreover, taken together, deficiencies in the coordination of both our fiscal and structural policies may have cost between 2 and 3 gdp points between 2011 and 2013.