attitude increasingly being taken to financial regulation. but this is not necessarily the case for those policies which, as i just mentioned, remain largely in the national domain but subject to european coordination. this is no coincidence. monetary policy and banking supervision are inherently technical and seemingly distant from the lives of ordinary people, whereas labour market institutions, product market regulations or the quality of a country ’ s administration are not at all like this, as they affect the everyday lives of individuals. the diversity of opinion on economic policy is a sign of a healthy, pluralist democracy and certainly not a problem. at national level, institutions and procedures exist which permit divergent views to be channelled into political decisions that leave little room for ambiguity. there are, as yet, no procedures or sufficient incentives to facilitate a consensus on the design of economic policies in a functioning economic and monetary union. this is a root cause of why the spirit of the common rules is not sufficiently respected – as there is no consensus on what this spirit ought to be. our methods of advancing european integration have so far not been sufficient to foster such a consensus – hence we need a lamfalussy moment and a shifting of gears. this would mean putting the debate on european integration back where it belongs – in the political arena. we are at a point where integration cannot and should not continue as a technical and technocratic exercise. it is now time for political leaders to take up the baton, because only they will be able to convince their electorates of the need for further deepening. therefore, as i said earlier, new economic convergence will need to be complemented by political convergence. such a process would, in an inclusive and democratic way, ensure that, in parallel to converging economically, we would develop a common understanding of economic policies in the euro area that would underpin our common rules. 8 such a political process might not lead to the best outcome from our point of view as economists. but this would be a price worth paying if, in return, the outcome is a consensus that is fully democratically legitimised. conclusion let me conclude by saying that it is not my role to prescribe how such a process could be structured. but as long as we continue to speak the language of the insiders and remain vague, we will not engage citizens in a debate on the right economic policies for the euro area. i can perfectly understand why political leaders do not want to face their electorates and defend a euro area fiscal capacity

may be more vulnerable to this transition. but, in our view, vulnerabilities in the financial system prevail in the non - bank financial sector, which grew fast and increased its risk - taking during the low interest rate environment. credit and liquidity risk remain high, making the sector more vulnerable to market volatility and an abrupt repricing in financial markets. despite some recent derisking, structural liquidity mismatch prevails in the non - bank financial sector and market corrections could be amplified by forced selling into illiquid markets. it is critical that policy reforms are pursued to address these vulnerabilities. priority should be given to policies that help build resilience in the sector, such as by reducing liquidity mismatch, mitigating risk from leverage, and enhancing liquidity preparedness across a broad range of institutions. 1 bankowski, k. et al. ( 2023 ), " fiscal policy and high inflation ", economic bulletin, issue 1, ecb. 3 / 3 bis - central bankers'speeches