of the euro hinges on the implementation of the necessary economic and fiscal reforms. and further steps must be taken to boost private and public risk - sharing. at the same time, as we progress towards completing economic and monetary union, we should keep in mind two principles that are at the heart of effective policy in a democratic society. first, liability and control must be aligned, with important decisions taken only by those who will bear their consequences. second, the discharge of democratic control must lie at the level at which policy decisions are taken. given the current state of our economic and monetary union, further efforts to deepen it through political and economic convergence are clearly indispensable. 1 archiv. bundesregierung. de / archiv - de / meta / startseite / meseberg - declaration - 1140806 2 www. ecb. europa. eu / pub / economic - bulletin / focus / 2018 / html / ecb. ebbox201805 _ 06. en. html 3 while the commission mentions such a mechanism, the identification of reversals is left overly vague. 4 “ where a member state is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the council, on a proposal from the commission, may grant, under certain conditions, union financial assistance to the member state concerned. [ … ] ” article 122. 2, treaty on the functioning of the european union. 5 restoy, fernando ( 2018 ), “ the european banking union : what are the missing pieces? ” ; public lecture at the international center for monetary and banking studies, geneva, switzerland, 16 october 2018. 6 www. ecb. europa. eu / pub / fsr / shared / pdf / ecb. sfbfinancialstabilityreview201711. en. pdf? 6 / 7 bis central bankers'speeches bc1a2e57de30c0b2cee99fbd4ae141a5 ; 7 see y. mersch ( 2016 ), “ reflections on the feasibility of a sovereign debt restructuring mechanism in the euro area ”, escb legal conference 2016. 8 see benassy - quere et al., “ reconciling risk sharing with market discipline ”, cepr policy insight, no 91, centre for economic policy research. 7 / 7 bis central bankers'speeches

##governmental conference on economic and monetary union – chaired as it happens by guido carli. we then built the euro together, step by step – and since then, it has been managed much more by the french and the italians – from tommaso padoa - schioppa to mario draghi – than by the germans. yes, frankfurt is in germany … just as brussels is in belgium. but italy and france now carry much more weight than before in the decision - making, because, in practice, at the time of the franc and the lira, our monetary policies had to more or less conform to germany ’ s. we only had one freedom left : the freedom to periodically devalue our currencies ; that was also humiliating, and above all left our people financially worse off. although devaluation provides short - term benefits linked to the fall in export prices, in the medium term these are potentially outweighed by the negative effects, which we have tended to forget : inflation caused by higher import prices, a fall in the value of the country ’ s wealth and an increase in its external debt. italian creativity, your commercial ingenuity, dating back to venice, genoa and florence, all count much more than the ease of a weak lira. 2 / the second reason is the economic results. for the past 20 years, italy and france have reaped substantial benefits from the single currency : price stability [ slide ], in other words a contained level of inflation that preserves household purchasing power. before the euro, inflation sometimes reached very high levels in europe : it averaged 8. 1 % in italy in the 20 years before the euro, compared with 1. 8 % in the last 20 years. stable financing conditions, due to a marked reduction in interest rates and a narrowing of spreads between countries [ slide ]. the spread between italy and germany, for example, has more than halved : it averaged 5. 1 % over 1986 – 92 – a period when we had a single market without a single currency, between the single european act that followed the milan european council, and maastricht – compared with 1. 9 % in 2017 – 18, even though it has widened again recently due to the re - emergence of uncertainties. and in france, it went from 1. 9 % to 0. 4 %. assuming, then, that one of our countries were to go back to pre - euro times – a scenario i see