solidarity framework – the european stability mechanism. it can provide financial assistance to member states in difficulty, thereby reducing threats to financial stability in the euro area as a whole. but we need continuous efforts, particularly in the area of financial policies. the “ four presidents ” of the eu were mandated to provide a vision for europe. in the context of our discussion today, i would say that they were tasked with identifying and outlining the minimum conditions to ensure the full viability of the euro area – which are the same as the minimum conditions to ensure continued trust in the euro. four pillars have been identified : a banking union with a single supervision and common resolution framework ; a fiscal union to prevent and correct unsustainable fiscal paths ; an economic union that can guarantee sufficient competitiveness to sustain high employment ; and a political union that can deeply engage euro area citizens. as i discussed accountability, let me say a word on the last pillar, political union. i think that the general issue here is to clarify who does what, to establish a network of responsibilities. the notion that the euro is a currency without a state is in my view misguided. the euro is a currency with a state – but it ’ s a state whose branches of government are not yet clearly defined. the ecb is part of the construction of economic and monetary union, with a very clear but very limited mandate. the other parts – i am thinking in particular of the delineation between the commission and the council – still require clarification. the proposal put forward by jean - claude trichet of a “ euro area treasury ” would be an important step in that direction. the ecb is independent and fully accountable, but it needs clearly identifiable and fully empowered interlocutors. peter bofinger, jurgen habermas and julian nida - rumelin : “ einspruch gegen die fassadendemokratie ”, frankfurter allgemeine zeitung, 3 august 2012. dirk schoenmaker ( 2011 ) : “ the financial trilemma ”, economic letters 111 ( 2011 ) 57 – 59. bis central bankers ’ speeches we all have in mind robert schumann ’ s prediction that “ europe will be built through concrete achievements which first create a de facto solidarity ”. now that the euro area crisis has created de facto solidarity, there is a need for concrete achievements to complete emu. this, together with the individual commitment of each government to restore balanced growth and employment,

. since early january, euro area long - term interest rates have continued to decline and the yield curve has shifted downwards. at the same time, the latest developments are giving mixed signals as to the evolution of the world economy in 1999. on the one hand, recent events in brazil have highlighted the fragility of the current situation in emerging markets, while on the other, output growth in the united states was much stronger in the last quarter of 1998 than expected. in the euro area too, available indicators continue to suggest a mixed picture. according to revised eurostat estimates, real gdp growth remained broadly robust in the third quarter of 1998, while in more recent months activity may have slowed down. such a slowdown is apparent in industrial production growth up to november 1998, in particular in the intermediate goods sector, which is particularly sensitive to any deterioration in the external environment. however, at the same time, production of capital goods and consumer durables has continued to expand rather strongly. a similar pattern can be observed in the decline in industrial confidence that has been apparent in the second half – 2 – of 1998 in the euro area, while, however, stabilising in january 1999. on the other hand, consumer confidence in the euro area continued to increase in december and in january ; it has now exceeded the peak level reached in 1990, with retail sales up to november showing continued solid growth and car sales growing strongly during the last months of 1998. finally, the mixed picture is confirmed by other data. order books, which overall declined slightly further in december, apparently increased again in january, particularly with respect to export orders. capacity utilisation in the manufacturing sector, which started to decrease in the third quarter recovered again thereafter, while december data on unemployment appear to suggest that the decline in unemployment rates stalled around year - end. therefore, with regard to the cyclical situation, recent data seem to confirm our earlier assessment that there are downside risks for output growth and that production may have slowed down around the turn of the year. nonetheless, in the opinion of the governing council there are also no clear signals as yet of a stronger than expected weakening in output growth. given the mixed picture outlined above, the governing council emphasised that further thorough analysis and very close monitoring of underlying trends are needed before any conclusions can be drawn concerning the broad outlook for 1999 and 2000. with regard to the latest data on the harmonised index of consumer prices, the annual increase for december 1998 showed a further slowdown