investment in europe. the action plan on the “ capital markets union project ”, launched in september 2015, aims at diversifying the way the european union economy is financed. the objective is to achieve a better balance between bank credit and market - based financing. france is a euro area frontrunner in this field, with markets providing 40 % of the financing for its economy. various initiatives are already well underway, like the framework for simple, transparent and comparable securitisation instruments, or the revision of capital requirements for investment in infrastructure by insurance companies. the juncker plan and the capital markets union should complement each other and the banking union, which is already in place, to fully deliver their results in terms of growth and investment. therefore, i prefer the concept of a “ financing and investment union ” rather than a “ capital markets union ”, as it better reflects the ultimate objective which is growth, thanks to a better mix of financing instruments including, but not limited to, capital markets [ slide 8 ]. significant amounts of savings are available in the euro area and these should be directed towards long - term assets, as well as to those projects and countries that need them. innovative schemes need to be developed at european level, such as european venture capital funds, in order to support the creation and growth of new businesses. the composition of investments is equally important, as too little money is devoted to r & d and long - term investments. we also need to encourage equity financing rather than debt funding. 5 / improve european economic governance the second idea i would like to share with you relates to economic governance in europe. i believe we need to make progress towards a more economically integrated euro area. this is essential, regardless of whether or not the united kingdom remains in the european union. naturally, i would like it to stay in. my point is not purely institutional. it is not about “ more brussels ”, it is about more growth and employment. indeed, economists estimate that the current lack of coordination between national economic policies has cost europeans between two and five percentage points of gdp growth since 2011. contrary to the case of monetary policy, the aim is not to fully integrate all of our economic policies at the european level, but to achieve a “ full coordination ” of fiscal and structural policies. for this, we need to have shared economic goals, and a true “ collective strategy ” for the euro area, in which each country has a role to play to improve everyone ’ s situation. this requires trust

anchoring the inflation rate. most explanations, however, are of a more structural nature. it is possible is that, as a result of structural reforms, the nairu has decreased in many countries in recent years, thus giving the " optical " impression of a horizontal phillips curve during this period. another interpretation is that firms change their prices less frequently both because it is less necessary in a low - inflation environment and more difficult due to increased competition, including from abroad. these arguments, however, 2 have been challenged on the basis that, in an increasingly competitive environment, setting the “ wrong ” price has become more costly for firms in terms of foregone profits, which should encourage them to adjust their prices more frequently. if anything, according to this view, competition and globalisation should be expected to steepen the phillips curve. in a broader sense, globalisation itself may also be responsible for the flattening of the philips curve. in an open economy, domestic demand changes can easily be satisfied through increased imports. as a consequence, domestic inflation may become less sensitive to the domestic output gap and more sensitive to global tensions on production capacities. notably put forward by laurence ball. finally, it is possible that ( due to immigration and structural reforms ) labour supply has become more elastic in many countries, and, as a consequence the cyclicality of wages ( and prices ) has been reduced. 3 flatter phillips curves may be a mixed blessing for central banks. in such circumstances, looking at actual and projected inflation may not be sufficient to detect incipient imbalances between supply and demand. in other words, inflation becomes less informative about the output gap. there is a risk, then, that imbalances are allowed to build up to a point where a stronger reaction may become necessary. to prevent that risk, central banks may want to look at information coming from a broader set of indicators, chosen because of their ability to detect, at an earlier stage, potential inflationary pressures. obviously, monetary and credit aggregates for instance are good candidates for such a job. what role for money in monetary policy? as you may know, this is precisely what is done in the context of the eurosystem ’ s two - pillar monetary policy strategy which assigns an important role to money. this structure is based on a particular premise and has one important implication. the premise is that even if money has no systematic and immediate influence on prices, it can provide valuable and specific information on future inflation,