. the final judgment now rests on our being able to show that cohesion also produces growth and jobs. the second reason why a stronger role for the union could be beneficial is that, similar to fiscal policies, establishing rules at the level of the union may in fact help national authorities implement reform. structural reforms reach deep enough into societal arrangements and practices that they can only succeed if they are made the object of strong domestic ownership. at the same time, those reforms require substantial political capital. historical experience, for example of the imf, makes a convincing case that the discipline imposed by supranational bodies can make bis central bankers ’ speeches it easier to frame the debate on reforms at the national level. in particular, the debate can be framed not in terms of whether, but in terms of how reform needs to take place. in other words, i am not convinced by the argument that, in terms of structural reforms, there is an opposition between rules and ownership. on the contrary, they can be mutually reinforcing. conclusion in conclusion, there is a strong case for us to apply the same principles to the governance of structural reforms as we do to fiscal governance. the essential cohesion of the union depends on it. with the benefit of hindsight, it would have been useful to establish, alongside the existing convergence criteria, a set of structural criteria that had to be met to enter the euro area, and then respected once inside. but we have to start from where we are. thus, i would see merits in initiating, as a one - off, a new convergence process within the euro area – one which ensures that all countries are truly in a position to benefit from membership, and that none cause harm to another. today, national governments are not able to fully exercise their sovereignty alone, whether sovereignty is defined normatively, a la jean bodin, in terms of inalienable rights, such as to declare war and treat the conditions of the peace, to judge in last resort, to raise taxes and to mint money ; or whether it is defined positively, a la john locke, in terms of a fiduciary power to act for certain ends. individually, national governments are simply not powerful enough. to serve their purpose, they have to learn to govern together ; they have to learn to be sovereign together so as to respond to their citizens ’ needs. those needs today are growth and job creation. bis central bankers ’ speeches

inflation aim in a sustained manner. let me now explain our assessment in greater detail, starting with the economic analysis. quarterly real gdp growth moderated to 0. 4 % in the first quarter of 2018, following growth of 0. 7 % in the previous three quarters. this easing reflects a pull - back from the very high levels of growth in 2017 and is related mainly to weaker impetus from previously very strong external trade, compounded by an increase in uncertainty and some temporary and supply - side factors at both the domestic and the global level. the latest economic indicators and survey results have stabilised and continue to point to ongoing solid and broad - based economic growth, in line with the june 2018 eurosystem staff macroeconomic projections for the euro area. our monetary policy measures, which have facilitated the deleveraging process, continue to underpin domestic demand. private consumption is supported by ongoing employment gains, which, in turn, partly reflect past labour market reforms, and by growing household wealth. business investment is fostered by the favourable financing conditions, rising corporate profitability and solid demand. housing investment remains robust. in addition, the broad - based expansion in global demand is expected to continue, thus providing impetus to euro area exports. the risks surrounding the euro area growth outlook can still be assessed as broadly balanced. 1 / 2 bis central bankers'speeches uncertainties related to global factors, notably the threat of protectionism, remain prominent. moreover, the risk of persistent heightened financial market volatility continues to warrant monitoring. euro area annual hicp inflation increased to 2. 0 % in june 2018, from 1. 9 % in may, reflecting mainly higher energy and food price inflation. on the basis of current futures prices for oil, annual rates of headline inflation are likely to hover around the current level for the remainder of the year. while measures of underlying inflation remain generally muted, they have been increasing from earlier lows. domestic cost pressures are strengthening and broadening amid high levels of capacity utilisation and tightening labour markets. uncertainty around the inflation outlook is receding. looking ahead, underlying inflation is expected to pick up towards the end of the year and thereafter to increase gradually over the medium term, supported by our monetary policy measures, the continuing economic expansion, the corresponding absorption of economic slack and rising wage growth. turning to the monetary analysis, broad money ( m3 ) growth increased to 4. 4 % in june 2018, up from 4. 0 % in may. m3 growth continues to