the erm crisis in the early 1990s showed – countries realised they could not integrate in part and benefit in full. the financial and sovereign debt crises since 2008 have only reaffirmed that truth. so the answer is not to unwind integration. nor is it to hold out an unattainable vision of where integration should lead. it is to complete our monetary union in the areas where it can and needs to be completed. we need ambition in our ends and pragmatism in our means. we have already shown how this can be done with the solidarity and stabilisation mechanisms that were set up during the crisis. banking union is also a remarkable achievement. now we need to make progress in the other areas that remain unfinished, notably in terms of economic and institutional convergence. still, i recognise that we cannot have a purely economic perspective on the questions facing our union. while economic integration produces more jobs and growth on aggregate, this does not completely solve the problem that drives dissatisfaction with the euro and the eu. there is also the problem of distribution : who gains and who loses from that process? for example, higher labour mobility across countries might reduce unemployment, but it can also stoke fears about immigration and create insecurity for low - skilled workers. opening up a previously protected sector might reduce costs for consumers, but it can also leave citizens employed there with an uncertain future. so, if we are to build lasting confidence in our union, we still need to address this tension – to reconcile the economics of integration, which is about efficiency, with the politics of integration, which is about equity. bis central bankers ’ speeches this is a complex issue, but a solution can be summed up in one word : skills. theoretical and empirical research both suggest that recent technological change has been skill - biased. in other words, production technology has shifted in a way that favours skilled over unskilled labour, by increasing its relative productivity and therefore its relative demand. equipping workers with the right skills therefore makes the economy more efficient and creates new job opportunities. and it also makes the economy more equitable by allowing as many citizens as possible to participate in those opportunities. for this reason, education and training need to be as much a part of the reform agenda as creating more flexible markets and reducing red tape. but there is also a second way in which the economics and politics of integration need to be reconciled. the more decision - making over economic issues moves to the european level, the more

democracy needs to move with it. this is not just because democracy is a core value of the eu. it is because making policy without adequate representation and accountability does not work. so we need to deepen our economic union and our political union together. and this means strengthening the channels for genuine european democratic legitimacy, like the european parliament. inevitably european democracy will be different. voters in any one country may initially fear that they have less influence over decisions than at present. but it is my belief and certainly what has happened in the monetary policy area that in giving up some formal sovereignty, people will gain in effective sovereignty. they will empower institutions with euro - wide responsibilities able to tackle the pressing problems of jobs and growth – and so their votes may in fact make more of a difference to their lives than they do today. in this way, i trust, we can reconcile those who feel left out, including many of the protesters gathered in frankfurt this week, with a process of integration that has already generated so many benefits for three generations of europeans. let me conclude. this building is a credit to all those who have worked to bring it to fruition. it is a landmark for the city of frankfurt. and it provides the ecb with an impressive new home to pursue its mandate. but it also stands as a powerful symbol of what european integration is about. it reminds us of where we have come from and where we have come to. of the horrors that can happen when we split apart, and the huge steps forward we can make when we work together. so let us not undo what has been achieved. let us not hanker for the past. let us draw on the past to unite us in the present – to build a complete union that can deliver the stability and prosperity we need. we as the central bank will do our part in this process by ensuring the integrity of our single currency. our shared money is the most tangible sign of the trust we place in one another. as the ecb ’ s first president, wim duisenberg, put it at the launch of the euro more than 16 years ago : “ a currency is far more than just a medium of exchange … a currency is also part of the identity of people. it reflects what they have in common, now and in the future. ” thank you for your attention. bis central bankers ’ speeches