##cratic ” control in an already complex framework, often criticized for lack of democratic accountability. in the medium term, and at least until the creation of a common fiscal stabilization function, the shock absorption capacity of euro - area countries remains dangerously limited ( especially for those countries with limited fiscal space ). in the longer term, since access to the common fiscal capacity would be conditional on significant and sustained economic convergence, completing europe ’ s economic and monetary union, prepared by jean - claude juncker, in close cooperation with donald tusk, jeroen dijsselbloem, mario draghi, and martin shultz. f. saccomanni, “ the report of the five presidents : a missed opportunity ”, documenti iai, 15 | 14, july 2015. bis central bankers ’ speeches there is a risk of introducing a new source of tensions among different member states within the euro area. regardless of its individual proposals, in my view the key questions to ask about the report are two : are we going in the right direction? and, are these efforts sufficient? i believe that, however arduous it might prove, it is worth proceeding along the roadmap set out in the report. but it might not be sufficient. i believe that more progress on the side of the political union should not come sequentially, at the very end of the process, but important elements should be considered right away. in other terms, more action at the economic and financial level needs to be accompanied by parallel action also at the institutional and intrinsically political level : for example, on the legal side ( from company and bankruptcy laws, to more basic rights and principles ) ; on solidarity and welfare ; on defence and security ; on the timing of elections, and so on. there is also a case for reversing the de facto predominance of the intergovernmental approach on the so - called community method, even if we must be aware of the risks of this being dominated by an excessively administrative and bureaucratic policymaking. i often joke that, for a sense of shared purposes to be built - up in the euro area and to fully remove uncertainty in the eyes of interested external partners and observers, perhaps it would have been better to have a “ single army ” before adopting a “ single currency ” …. jokes apart, and aware that issues such as this have been very much debated over the last sixty years or so, i believe that those taken in the last

r. a. mundell and a. k. swoboda ( eds. ), monetary problems in the international economy, university of chicago press, chicago, 1969. t. padoa - schioppa, “ il passo piu lungo ”, corriere della sera, may 3, 1998. t. padoa - schioppa, interview with la repubblica, august 6, 2008. bis central bankers ’ speeches perhaps the convergence process had been displaced, firstly, by the acceleration of the enlargement of the eu and increased participation in the eurosystem and, secondly, by a clear ( though according to some, irrelevant ) predominance of intergovernmental agreements over the so - called community method. the response to the crisis in this framework, after the global financial crisis and the very severe global recession in 2008 – 09, the full revelation of the conditions of greek public finances produced tensions, which then spread to the economically weaker euro - area countries, characterized by excessive public or private debt, a foreign trade deficit, poor competitiveness, and low economic growth. tensions grew with the bursting of the property bubble and the consequent disruption of banking in ireland. with the announcement of the involvement of private investors in restructuring greek debt in the summer of 2011, financial markets suddenly became aware of the implications of the ban on interventions to rescue member states under the treaty on european union. there followed a very serious crisis of confidence in the ability of the single currency to survive, with negative consequences for the real economies of individual countries and for the area as a whole. the list of potential causes of the crisis is rather crowded. fiscal imbalances, labour market rigidities and competitiveness deficits, insufficient innovation and productivity growth, excessive bank lending from core to periphery countries, all these have been good cause of lags, disturbances and vulnerabilities. but i believe that the sovereign debt crisis should be interpreted first and foremost as a major lack of trust in the future of the emu, the euro and possibly the eu. the severity of the sovereign debt crisis, which at some point threatened the very existence of the single currency, owes in part to the incompleteness of the emu project, which dramatically exposed the reversibility of even the major progress towards european financial integration made with the introduction of the euro. the rise in yield spreads between government bonds in the euro area was determined by two factors, one national