jorg asmussen : cooperation and diversity – principles for a stable euro area acceptance speech by mr jorg asmussen, member of the executive board of the european central bank, at bocconi university on the occasion of the award ceremony “ alumnus of the year ”, milan, 25 october 2013. * * * dear professor monti, dear mario, dear professor sironi, dear mr guindani, ladies and gentlemen, i was a bit surprised when my assistant told me that professor monti would like to have a telephone conversation with me. i thought, when the former italian prime minister wants something from the ecb, why doesn ’ t he call the other “ super mario ”, the ecb president. but i returned his call immediately, of course. surprise and joy were tremendous when he informed me about the decision of bocconi university to grant me the award “ alumnus of the year 2013 ”. i feel very honoured and i am very grateful to receive this award and i see it as an obligation for the future at the same time. i would like to thank mario monti for his very kind introduction. it is generous of mario to say repeatedly that he knew me during my mba here in 1991 - 92, but i suspect there was some asymmetry in the relationship. i was a student and he was the rector, so i think it was rather that i knew him! my choice to study an mba degree at bocconi may have had something to do with the old german craving for italy. if there is such thing as an emotional relationship between peoples, then for sure between germans and italians, just think of goethe ’ s italian journey and the quest for arcadia and, on the other hand, the long - standing italian admiration for german efficiency and our sense of order. the time i spent at bocconi i look back on with great fondness. it was a privilege to study in one of the great seats of learning in italy and europe. and i see this period as one that helped forge the views that later served me as a european civil servant and policy - maker. when i studied here aged 25, i was coming from northern germany with little first - hand experience of other cultures besides the danish one. but being here at bocconi changed all that. it was a truly multicultural environment, with students from 26 different nations from around the globe, working side by side. i shared a flat with two turkish students. all these experiences taught me some key

have fuelled asset price rises and private indebtedness. hence, current account imbalances within the euro area should be a source of concern for policy - makers when they relate to losses of competitiveness. a useful way to measure excessive imbalances is to look at unit labour costs, as these reflect developments in both productivity and labour costs. if we compare countries with an external surplus and countries with an external deficit, we see that, since the introduction of the euro, unit labour costs have increased by 28 % in deficit countries, 2. 5 times as much as in surplus countries. for sure, some of this differential might reflect sustainable increases in income per capita or other “ catch - up ” effects. but to a much larger extent, this differential relates to structural problems and reflects growing misalignments between developments in wages and productivity. these misalignments have also become visible in terms of deviations from price stability. indeed, we can observe that most countries with strong current account deficits prior to the crisis had also experienced substantial increases in prices. ensuring price stability is key for competitiveness. it provides the nominal anchor for future price developments. it is key for the euro area as a whole as much as it is key for all countries. significant and persistent deviations from price stability translate into losses of competitiveness and should be corrected. restoring competitiveness is vital for a number of countries within the euro area. policies to ensure sufficient responsiveness in wages and prices, as well as to boost productivity, are crucial ingredients in the rebalancing. the policy challenge let me conclude. the euro area ’ s performance in the global economy is good, but continuous adjustment is needed to keep up in a highly dynamic international environment. within the euro area, a number of countries need to repair and strengthen their competitiveness for the sake of their own continued prosperity and the overall stability of our economic and monetary union. this process requires going to the root of the loss of competitiveness, tackling its sources and enhancing the opportunities for growth. the time frame of this correction will differ according to the degree of the imbalances and countries ’ overall economic conditions. but in times of severe financial constraints, there is no other choice than to address the structural losses in competitiveness in an urgent and decisive manner. what monetary policy can do for competitiveness is to ensure price stability in the euro area, reducing risk premia and making sure that all the transmission channels of the monetary impulse do