violate the european rules. as regards economic union, the euro area needs to achieve a higher degree of economic convergence, in terms of competitiveness, growth potential and flexibility. this is essential for each individual country and for the smooth functioning of the euro area as a whole. the framework for policy coordination should be made more stringent and enforceable at european level. at the same time, due attention should be paid to fostering national ownership of the necessary reforms. progress in these fields would require commensurate steps towards political union. in view of the multiple geometries implied by the eu integration process, the need for an enhanced political dimension is even more pressing for the euro area. sharing a single currency implies a substantial sharing of sovereignty and economic integration, going well beyond the requirements of a single market. there are a number of possible options to enhance effectiveness and legitimacy of decisionmaking in the euro area. for example, a permanent eurogroup president as the nucleus for a euro area finance ministry with proper analytical capacity and more autonomous decision - making powers could be a step in the right direction. this could be accompanied by stronger accountability towards the european parliament, in particular for the implementation of the governance framework, for example in a euro - area sub - committee of the european parliament. let me conclude by broadening again the scope of our discussion and coming back to the founding declaration of 1950. going beyond the establishment of a common economic system, the eu project was from the beginning aiming at creating a deeper community of member states. recent progress in the financial and economic field should not make us forget that citizens also expect europe to deliver on broader public goods such as internal bis central bankers ’ speeches and external security. the single market and the eu ’ s “ four freedoms ” ( i. e. free movement of goods, capital, services and people ) have brought new challenges for law enforcement authorities. moreover, the fragility of external security, especially at the borders of the eu, remind us that, as put forward by schuman in 1950, “ world peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it ”. it requires going beyond the economic foundations of the european project. bis central bankers ’ speeches

transaction tax ( ftt ), for example further integration of the single financial market and increased financial stability. however, as you know, the ftt is currently discussed among only 11 countries which have decided to enter into an “ enhanced cooperation ” on that specific issue. as all member states will not be part of this arrangement, it should be ensured that the planned tax would not have unintended side effects such as hampering the transmission of the single monetary policy and the smooth functioning of settlement systems. in particular, a coherent approach with countries which are not part of the enhanced cooperation is vital to avoid regulatory arbitrage. the crisis has also spurred discussions on how to better bring the financial sector back to its core mandate : being at the service of the real economy. i strongly believe that more can be done to unlock affordable financial resources for european smes. as 99. 7 % of firms in the eu are smes, euro area economies ’ well - being is intertwined with the financial health of smes. by assisting banks ’ ability to fund and distribute risk the securitisation of sme loans could contribute to connect the financing needs of smes with the funds of investors who would otherwise not invest in those smes.. looking forward, at least three steps are necessary. first, more work should be done to distinguish ‘ high quality ’ segment of the abs market and make them more robust to market stress, thereby providing banks with a more resilient form of funding. second, available data and general standards applied to all abs should be further improved. third, the regulatory treatment of securitisation should be revised to better reflect the risk - mitigating features of high quality securitisation and to address current inconsistencies in the legislation. more generally – going beyond the notion of banking union, we should work towards creating an integrated financial market union that supports the real economy. this requires in particular two elements : developing cross - border capital markets offering a real alternative to banks ’ financing ; and ensuring that banks are able to operate smoothly across borders and to undergo mergers and acquisitions without any national bias. in this context, let me also focus on what is often referred to as the plumbing of the financial sector, that is, the single market for payment and cross - border securities settlement. harmonisation is key to ensure that both the single market and the single currency function smoothly. the ecb has delivered an important contribution in this regard. in the early 2000s