peter praet : emu - how much federalism? keynote address by mr peter praet, member of the executive board of the european central bank, at the 5th frankfurt conference on financial market policy, organised by the safe policy center of goethe university, frankfurt am main, 27 october 2017. * * * ladies and gentlemen, i would like to thank the organisers jan - peter krahnen and hans - helmut kotz for inviting me to speak at the fifth edition of the frankfurt conference on financial market policy. the theme of the conference is well - chosen. despite significant improvements to its architecture over recent years, there is a clear sense that economic and monetary union, or emu, remains incomplete. there is much less clarity and precious little agreement on what a complete emu would look like, however. this is why the question posed by the organisers – “ how much federalism ” – is so relevant. in my remarks, i would like to first review how federalism has evolved in the eu, highlighting that it is as much a process as it is an end - state. i will then – drawing on the economic concept of fiscal federalism – look more at the question of “ how much federalism ”, focusing on issue of risksharing and the role of different levels of governance within emu. federalism in the eu the nature of the discussion on federalism in europe has changed quite dramatically over time. shortly after the second world war, the ambition for some was to create a “ united states of europe ”, mainly as a way to avoid renewed, devastating war. this vision was shared by those who laid the foundations of the european union in the 1950s, most notably jean monnet, the first president of the european coal and steel community. from today ’ s perspective, it may seem surprising that the start of such a grand project was confined to an area as specific as coal and steel. but monnet and the other early architects of european integration clearly understood that political federalism was the end - point of long process, which had to be achieved incrementally and through focused actions in limited policy areas where the benefits of european cooperation could be clearly seen. to quote one of monnet ’ s contemporaries, alcide de gasperi, “ we must begin by pooling only what is strictly essential to the achievement of our immediate aims, and do this by means of flexible formulae which can be gradually and progressively applied ”. for these “ fathers

##makers is to ensure the institutions they lead can respond and adapt to rapid change while delivering on their mission, communicating clearly what they are doing and why, and holding true to the values that underpinned their creation. that brings me to an important institution : our relationships. the eu ’ s overarching framework reflects the interconnectedness of its diverse communities, their common history and their joint aspirations. those communities, their history and their aspirations are reflected in the institutions that have been built over seven decades, from the coal and steel community to the economic community to the european union and the ecb and its soon - to - be twenty members. the relationships that have built that europe are reflected in the institution that is the irish / german relationship and in the consulate that is based here in the great city of frankfurt. i think st kilian would have approved. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ i would like to particularly thank naoise metadjer, michael o ’ grady, thomas conefrey for their contribution to my remarks. 2 i have spoken about the role of institutions in rebuilding social capital recently here. 3 douglass, c., 1991. douglass c. north. the journal of economic perspectives, 5 ( 1 ), pp. 97 - 112. 4 haldane, andrew. why institutions matter ( more than ever ). address to the centre for research on socio - cultural change ( cresc ) annual conference, school of oriental and africa studies ( 4 september 2013 ). 5 see central statistics office ( cso ) outward foreign affiliates statistics ( ofats ). 2019 data. ida ireland, ibec, department of finance 7 eiopa insurance overview report 2021 here 8 see the central bank ’ s market based finance monitor ( figures updated for q4 2021 ) https : / / www. imf. org / en / publications / cr / issues / 2022 / 07 / 07 / ireland - financial - system - stability - assessment - 520469. haldane, andrew. why institutions matter ( more than ever ). address to the centre for research on socio - cultural change ( cresc ) annual conference, school of oriental and africa studies ( 4 september 2013 ). 11 in response to the financial crisis of 2008 and the subsequent sovereign debt crisis revised liquidity and capital requirements were introduced under directive 2013 / 36 / eu ( crd iv ) and regulation ( eu