of the euro hinges on the implementation of the necessary economic and fiscal reforms. and further steps must be taken to boost private and public risk - sharing. at the same time, as we progress towards completing economic and monetary union, we should keep in mind two principles that are at the heart of effective policy in a democratic society. first, liability and control must be aligned, with important decisions taken only by those who will bear their consequences. second, the discharge of democratic control must lie at the level at which policy decisions are taken. given the current state of our economic and monetary union, further efforts to deepen it through political and economic convergence are clearly indispensable. 1 archiv. bundesregierung. de / archiv - de / meta / startseite / meseberg - declaration - 1140806 2 www. ecb. europa. eu / pub / economic - bulletin / focus / 2018 / html / ecb. ebbox201805 _ 06. en. html 3 while the commission mentions such a mechanism, the identification of reversals is left overly vague. 4 “ where a member state is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the council, on a proposal from the commission, may grant, under certain conditions, union financial assistance to the member state concerned. [ … ] ” article 122. 2, treaty on the functioning of the european union. 5 restoy, fernando ( 2018 ), “ the european banking union : what are the missing pieces? ” ; public lecture at the international center for monetary and banking studies, geneva, switzerland, 16 october 2018. 6 www. ecb. europa. eu / pub / fsr / shared / pdf / ecb. sfbfinancialstabilityreview201711. en. pdf? 6 / 7 bis central bankers'speeches bc1a2e57de30c0b2cee99fbd4ae141a5 ; 7 see y. mersch ( 2016 ), “ reflections on the feasibility of a sovereign debt restructuring mechanism in the euro area ”, escb legal conference 2016. 8 see benassy - quere et al., “ reconciling risk sharing with market discipline ”, cepr policy insight, no 91, centre for economic policy research. 7 / 7 bis central bankers'speeches

yves mersch : europe : a work in progress - political integration and economic convergence in monetary union speech by mr yves mersch, member of the executive board of the european central bank, at the banking and corporate evening, organised by the hauptverwaltung in bayern der deutschen bundesbank, munich, 22 november 2018. * * * ladies and gentlemen, europe has no problem with identifying the issues it faces ; it has a problem with implementing solutions. many of the weaknesses and shortcomings of the european framework have long been known. and the measures required to address these issues have repeatedly been discussed for some time now. unfortunately, national interests and complacency have consistently dampened the momentum that europe needs to become a true economic and monetary union. electoral machinations extending to the regional level and rising populism have recently added to the problem. the latest proposal was in june. at a meeting in meseburg palace, the leaders of france and germany issued a joint declaration in which they stated their objective “ to strengthen and deepen the euro area further, and make it a genuine economic union ”. their statement that sharing the same currency entails specific needs in terms of economic coordination and integration1 is correct – and it is something that has long been known. as far back as 1970, the committee of experts chaired by the then luxembourg prime minister pierre werner, which drew up the first meaningful plan for a european monetary union, stressed that insufficient economic convergence and the absence of a common fiscal policy would give rise to the need for greater economic policy coordination. later proposals, including the maastricht treaty of 1992, unfortunately failed to sufficiently tackle the inherent tensions of a currency without a state. the spirit of meseberg stems from the original european idea and the pledge of prosperity that brought the single currency into being : the euro benefits member states. they profit from having a credible and stable currency and a larger, competitive market. but the crisis demonstrated that the euro area is susceptible to negative shocks and that greater economic and political convergence is needed. today, i would like to focus on three areas in which it is vital to make progress. first, we have to more actively pursue fiscal and structural reforms. second, we need to further reduce risks and fragmentation in the financial sector. and third, we must decisively strengthen the institutional architecture of economic and monetary union ( emu ). structural reforms and fiscal policy unlike countries that have their own currency, euro area members cannot use