felt – i am even tempted to say, physically – by those who have travelled from one euro area country to another this year. from single market to single currency it is not enough to say that the euro is the symbol of a large european community. as a matter of fact, the introduction of the euro also goes back to the economic interests that it materialises. in line with the functionalist approach to european integration taken by schuman and monnet, the broader european vision was to be achieved by embarking upon economic integration first. in 1957, when the european economic community was established, its objective was to establish the free circulation of goods, services, capital and labour. this was achieved, after the ratification of the european single act in 1986, with the creation of the single market in 1993. the four markets for goods and services, capital and labour are exactly those that money serves. it is their boundaries that define the area within which money serves the public as a means of exchange, a unit of account and a store of value. seen from this perspective, the conclusion seems natural : if money is a public good at the level of the single market, then it is at that same level that a single currency should be established. in the context of the single market, the establishment of a single currency was the way to ensure that citizens would benefit in full from all the functions of money. far from removing money from people, monetary union has given it back to them. a second contract that the euro has economic origins does not reduce its significance as a social contract. however, its success as a social contract is only possible because it is rooted in a second accord, a constitutional contract, between the citizens who own it and the institution to which they have assigned the task of protecting it. the recognition that the management of the currency, being a policy function, requires a constitutional backing is not exactly new. in 1360, the french bishop and philosopher nicolas oresme was among the first to successfully argue that money did not belong to the state, but to " the community and [ to ] each of its members ". one can only give credit to the architects of the maastricht treaty. they recognised the need for the functions of money to be provided at eu level. the architects of the treaty also understood that a single currency can only fulfil its monetary functions and its role as an integrating force so long as it retains its value. therefore, they drew up a solid monetary

central bank of chile september 2019 “ from weakness to strength : the journey of the chilean financial system and its next steps ” chileday – september 10 and 11th, 2019 – london, england mario marcel governor of the central bank of chile the chilean financial system has changed notably in the past four decades. while in the early 1980s it was at the center of one of the worse economic and social crises in history, now it is a major source of strength, providing resilience to the economy in the face of external shocks. so, how did this happen? what is the source of such resilience? what new challenges lie ahead? that is the purpose of this presentation. in a nutshell, we can argue that the regulatory changes that followed the crisis set a new framework that, far from preventing financial development facilitated it in a way consistent with economic development. some key reforms – most notably pension reform — facilitated the emergence of new actors, making the financial sector more diverse, deep and forward - looking. many pieces of evidence and tests in our semi - annual financial stability report, have demonstrated over recent years that the chilean financial sector is currently well equipped to face external shocks, providing key support to the flexible exchange rate regime by reducing the exposure of the business and financial sector to fx fluctuations. similarly, the development of long - term capital markets secure local currency financing to investment projects and to the government itself. the relationship between the financial sector and fx markets will indeed be an important part of this presentation as a connection between financial and macro stability. this is an important pillar for a small open economy like chile, where the capital account was opened almost 20 years ago. this is, at the same time, an area where we can make additional progress, and i will share with you some of our immediate plans that combine well with the agenda that minister larrain has just presented. page 1 of 20 central bank of chile september 2019 some 50 years ago, banks where almost the only source of financing for firms and households. the chilean economy was closed to international trade and capital flows, interest rates were regulated, credit was restricted, and banking activity was largely controlled by the state. in the second half of the 1970s, the banking sector was privatized and liberalized. however, this was not accompanied with adequate regulation and supervision ; and a relatively small financial system built major vulnerabilities. when macro policy missteps and external shocks hit in 1982, the banking sector was not just a weak link