less europe would be a mistake if we want to remain in control of our common destiny. that said, there is room for further improvement, for a “ better europe ”. twenty - five years ago, we spoke of an “ economic and monetary union ”. since then, we have made a success of monetary union, but we have not been very effective with regard to economic union. the rather good economic performance in the euro area on average still conceals individual heterogeneities. [ slide ] and so, first and foremost, some countries, like france and italy, need to accelerate domestic structural reforms to improve the functioning and flexibility of their economies. and let me be clear, it is in our national interest : we currently have lower economic growth and employment than some of our neighbours, such as germany, spain and the netherlands, which have succeeded in carrying out the necessary reforms. in order to achieve a “ better europe ”, we need to complete these domestic reforms with what i call the “ growth triangle ” [ slide ]. it calls, at european level, for two concrete projects, in addition to domestic reforms : a “ financing union for investment and innovation ” ( fuii ) and a collective economic strategy. the first project, to be started immediately, is a “ financing union for investment and innovation ”, because the financial crisis has led to a persistent “ investment crunch ” at the european level. and yet it is not for lack of resources : the euro area has a savings surplus of more than eur 350 billion, equivalent to more than 3 % of gdp. that is huge. several initiatives are already in place : the investment plan of the european commission ( “ juncker plan ” ), the capital markets union and the banking union which is now underway ; but they do no deliver sufficient results. it is now necessary to make these initiatives converge into the fuii. europe needs a better sharing of private sector risk, in order to channel its abundant savings more effectively towards productive investment. and the equity financing of businesses, across european borders, must be a priority. europe is lagging far behind in this area : such financing only represents 67 % of gdp in the euro area compared with 125 % in the united states. the second project, on which we could make progress after the french and german elections that will take place this year, is a collective economic strategy in the euro area. growth and employment will be stronger in europe if we combine more structural reforms where they are a priority

and efficient financial intermediation framework. that is why, at the euro area level, the financial union project is fundamental. at the global level, the fsb ’ s role is crucial in developing a robust technical, regulatory and prudential architecture, adapted to the interconnection of our economies. seventh and last remark : fiscal policy and debt management. here, i would say that we are all guilty of a certain degree of ambiguity, both at the market level and at the political level : • on the one hand we want public debt markets that are broad, deep and liquid, because they form the base on which our entire financial system is built. in particular, government bonds are the safest and the most liquid assets. they act as reserves of value for a large number of investors, starting with the central banks themselves which hold them as foreign currency reserves or as monetary policy collateral. • and on the other hand we want solvent states, i. e. with perfectly controlled deficits and levels of public debt, which logically places limits on the growth of public debt markets. this contradiction is known by economists as the “ triffin dilemma ”. it was first identified in relation to the u. s. balance of payments deficits and the value of the dollar, but it can also be applied to fiscal equilibrium. the economy needs a growing volume of risk - free assets, but the more they are issued, the more risky they become. we cannot totally side - step this dilemma, but we can avoid making it worse. it is clearly not good for major developed countries to find themselves in a situation where their solvency is put into question, or to allow markets to think that under certain circumstances, they may be unable to honour all their commitments. but this is what we have done in europe, against the better judgement of the ecb, by introducing the principle of private sector involvement. the idea is attractive in theory. however, its consequences for financial stability are extremely negative. there has never been any doubt about whether the united kingdom or the united states would honour their debts. today they are enjoying very favourable interest rates compared with spain and italy even though the latters ’ fiscal fundamentals are better. i know that some attribute this difference in borrowing conditions to the actions of the uk and u. s. central banks. i do not agree. i believe that europe has a major project ahead of it to recreate a broad, deep and liquid public debt market that is completely