citizens, who appear to have fully accepted the euro as their currency. in terms of european economic integration, the introduction of the euro is often regarded as an end point. however, in my view, this is not the case. in addition to the political dimension of the introduction of the euro, representing as it does a step towards ever closer union, its introduction is also a catalyst for further economic integration in europe. this has already become apparent in the area of financial integration ; here increased integration has been brought about by market developments as well as policy initiatives, in particular the european commission ’ s goal to create a truly integrated european financial market by 2005. i should like to take the opportunity today to address another area where, at least in my view, the introduction of the euro has illustrated the need for more co - ordinated efforts in the european union. i refer in particular to an increased need to enhance the co - ordination of structural policies in europe, i. e. policies which aim to improve the functioning of market mechanisms and the operation of the economy as a whole. in my view, there are three reasons why such enhanced co - ordination of structural policies is necessary. first, the introduction of the euro has made exchange rate fluctuations obsolete as an instrument of adjustment. for instance, before the establishment of economic and monetary union ( emu ), divergent national economic developments could be addressed by a depreciation or appreciation of national currencies. in a monetary union, such adjustment has to take place via other mechanisms, such as price and wage adjustments, labour mobility, or, most unwanted, a temporary rise in unemployment. in order to avoid the latter, and to enhance economic adjustment via wages and prices so that it is comparable to the level of adjustment existing between regions of the united states, policies aiming at increasing the flexibility of the markets are necessary. second, in our monetary union, with increased trade and financial links between the member countries, the significance of spillovers from national economic policies has also increased. in other words, if governments embark on economic policies that are not sound, or hamper the functioning of their economies, the adverse consequences will not be limited to the country concerned, but will also have an impact on other countries participating in the euro area. hence, the increased risk of spillovers from insufficiently effective structural policies warrants enhanced co - ordination of such policies at the european level. finally, it has become increasingly clear - on the basis of both practical experience and

long period of time with regard to the reinvestments, as we cannot exclude the possibility that we will reach our inflation objective earlier than expected or that there will be an increase in negative side effects from our expansionary monetary policy. is quantitative easing ( qe ) a tool the ecb could use again in the future, as some current and former governing council members have suggested? 1 / 2 bis central bankers'speeches in the context of a monetary union with many different sovereigns and no fiscal, genuine economic and political union, qe should not be part of the normal policy toolbox. it should be a tool of last resort, to be used only when there is a clear risk of deflation. with a long - lasting, very accommodative monetary policy, side effects and risks emerge. and while pursuing price stability is the main objective, we also have to keep in mind the costs – and not only the benefits – of our monetary policy measures. what danger does the row between rome and brussels over the italian budget present for the country ’ s banking system? as a banking supervisor it ’ s not our task to comment on political discussions or decisions with regard to the budgets and fiscal stances of individual countries. banks have to acknowledge changes and risks in the macroeconomic environment they operate in. and if these changes are relevant, we as supervisors adapt our assessment of banks ’ risk profiles, too. overall, the italian banking system has become more resilient and banks are better equipped to deal with uncertainties than they were before. what do you see as the top priority for banking supervision in the coming months and years, in italy and elsewhere? among other topics, there is still further work to do on non - performing loans. they will keep us busy for the coming years. the cleaning up of banks ’ balance sheets should be pushed through as quickly as possible. this is not specific to italy. all banks should do their utmost to improve their resilience in sunny times when the economic cycle is on the upside. not all banks have done all of the work we would like them to do. some are well under way, and some still need to do much more. some observers are disappointed that a male candidate – italy ’ s andrea enria – will take over as head of ecb banking supervision from daniele nouy next year, rather than irishwoman sharon donnery. how did you feel about the news? i hope that our ratio of women in central