it is to be expected that, unlike in recent years, the reduction of the budget deficit will foreseeably be boosted by a more positive performance of tax revenue and a decrease in those expenses more closely linked to the economic cycle, particularly unemployment benefits. the efforts to contain spending should desirably be accompanied by public spending and revenue arrangements which help to ensure that the public sector makes a better contribution to economic activity and to achieve a lasting adjustment. as for public spending, various actions have already been undertaken in the area of public employment in the health and education sectors, as well as in reforming local government administration and streamlining the public sector, among others, which should continue to generate savings over the coming years. in line with the recommendations of the european council, this process would gain in depth and consistency if it were accompanied by a public spending assessment and review. given the degree of decentralisation in spain, such an exercise requires the active collaboration of the regional governments. of the various public expenditure items, spending on pensions is particularly important given its high share and the challenges faced in relation to its sustainability in the medium term. progress in this area has been significant as a result of the various reforms approved. in particular, in 2011 the retirement age and the period for calculating the regulatory base were increased, and in 2013 the so - called “ sustainability ” factor was defined and the revaluation index of pensions was introduced. these measures will help to ease the pressure in the medium term arising from population ageing. the next step should be to develop the mechanisms to increase saving for retirement so that in the future this may complement defined - benefit public pensions. turning to public revenue, according to the findings of the committee of experts – which delivered its report in march 2014 – and the recommendations of international agencies, a reform is needed to redress the problems which have become visible during the crisis. these problems include most notably the low revenue - raising capacity of the tax system, the high legal rates of taxation alongside low effective rates of taxation due to the proliferation of tax benefits, and a bias towards a more distortional system of taxation for economic growth and employment, namely, that levied on labour and capital. given this diagnosis, the proposals of the committee of experts and international agencies coincide as to the need to increase the weight of indirect taxation to permit a reduction in the taxation of labour, particularly social security contributions, and also a lowering of the taxation of capital income. additionally, the committee suggests that tax re

##lmeyer ( 2018 ), “ the search for a euro area safe asset ”, peterson institute for international economics working paper, 18 - 3. brunnermeier et al. ( 2017 ), esbies : safety in the tranches, and esrb ( 2018 ). zettelmeyer and leandro ( 2019 ), “ beyond esbies : safety without tranching ”, in risk sharing plus market discipline. a new paradigm for euro area reform. 7 / 8 safe source of financing would be tailor - made for them. it could also provide some stabilisation for the economy, as investment provides a safety net in times of economic distress. in short, some sort of european investment agency, whether in the form of a new or an existing euro area body, with the capacity to issue bonds, might be able to target an optimal fiscal policy stance, while providing the economy with more safe assets, thus facilitating monetary policy transmission, increasing the international role of the euro and completing the banking and capital markets union. twenty years ago, the euro was seen, in christian noyer ’ s words, as a catalyst for integration. this view is now as valid as it was then. in order to achieve price stability, the single currency generates the need to pursue sound economic policies. but it is clear now that monetary integration does not immediately lead to financial integration. this is an ongoing process, and the governance framework to guarantee the success of the european project is still developing. we must endeavour to achieve completion of the capital markets union and the banking union. this will also require progress towards the fiscal union. a european safe asset lies at the heart of all of these initiatives. but, more often than not, the heart is the most difficult place to reach. i am sure that these two days will bring advanced research and a constructive exchange of views to bear on this and other important areas of the euro area architecture. thank you for your attention. 8 / 8