gradually waning, even well before the introduction of the euro. in italy, potential growth declined from an average estimated at around 2. 5 % in the early 1990s, to 1. 5 % by 1999. the decline continued afterwards, and is now estimated by the imf and other institutions to be close to zero. so how can we reverse this trend? raising potential growth is principally about lifting the labour supply ( the amount of hours people work in the economy ) and productivity ( how much people produce per hour worked ). see my introductory remarks at the economic and monetary affairs committee of the european parliament, brussels, 23 march 2015, http : / / www. ecb. europa. eu / press / key / date / 2015 / html / sp150323 _ 1. en. html. bis central bankers ’ speeches given our ageing population, however, we can only expect limited gains on the labour side. we therefore have to focus our efforts on making our economies more productive. for most countries in europe, and for italy in particular, productivity growth rates have been very modest. between 2000 and 2013 productivity 2 in the euro area grew cumulatively by 9. 5 %, by barely 1. 3 % in italy and by 26. 1 % in the us. total factor productivity 3, which assesses the efficiency of the use of inputs to productive processes, has only grown by 1. 1 % in the euro area. in italy it has fallen by 7. 7 % and in the us it has risen by 10. 5 %. productivity can be raised through the emergence of new firms using more efficient technologies and by the reallocation of resources among already existing firms. the benefits of technological progress often appear over the longer term because the efficient use of a new technology often takes a long time to learn, while the reallocation of resources can lift productivity over a shorter time horizon, given that it implies a shifting of resources within already active firms. if we want to raise productivity quickly, the key factor is reallocation. firm - level analyses in the euro area suggest that there is much scope for improvement here. 4 within individual countries there are a few highly productive firms and many which have low productivity. it is essential to act so that those high - productivity firms can grow, so that they can benefit from an adequate flow of capital them and so that the people have the skills needed to be able to work there. to achieve each of those three goals – growth,

citizens, who appear to have fully accepted the euro as their currency. in terms of european economic integration, the introduction of the euro is often regarded as an end point. however, in my view, this is not the case. in addition to the political dimension of the introduction of the euro, representing as it does a step towards ever closer union, its introduction is also a catalyst for further economic integration in europe. this has already become apparent in the area of financial integration ; here increased integration has been brought about by market developments as well as policy initiatives, in particular the european commission ’ s goal to create a truly integrated european financial market by 2005. i should like to take the opportunity today to address another area where, at least in my view, the introduction of the euro has illustrated the need for more co - ordinated efforts in the european union. i refer in particular to an increased need to enhance the co - ordination of structural policies in europe, i. e. policies which aim to improve the functioning of market mechanisms and the operation of the economy as a whole. in my view, there are three reasons why such enhanced co - ordination of structural policies is necessary. first, the introduction of the euro has made exchange rate fluctuations obsolete as an instrument of adjustment. for instance, before the establishment of economic and monetary union ( emu ), divergent national economic developments could be addressed by a depreciation or appreciation of national currencies. in a monetary union, such adjustment has to take place via other mechanisms, such as price and wage adjustments, labour mobility, or, most unwanted, a temporary rise in unemployment. in order to avoid the latter, and to enhance economic adjustment via wages and prices so that it is comparable to the level of adjustment existing between regions of the united states, policies aiming at increasing the flexibility of the markets are necessary. second, in our monetary union, with increased trade and financial links between the member countries, the significance of spillovers from national economic policies has also increased. in other words, if governments embark on economic policies that are not sound, or hamper the functioning of their economies, the adverse consequences will not be limited to the country concerned, but will also have an impact on other countries participating in the euro area. hence, the increased risk of spillovers from insufficiently effective structural policies warrants enhanced co - ordination of such policies at the european level. finally, it has become increasingly clear - on the basis of both practical experience and