failed to take account of the common interest. as he wrote, “ cooperation between nations, however important it may be, does not resolve anything. what one has to seek is a fusion of the interests of european people, not just to preserve a balance among those interests ”. 3 thus he promoted his supranational method of decision - making based on common institutions and majority rule for two reasons. first, because such institutions could execute and decide in the common interest ; and second, because they could produce economies of scale via the pooling of resources, thereby increasing the effectiveness of policymaking. in this way, his approach to sovereignty was essentially positive. he did not conceive of sovereignty so much in terms of normative rights as in terms of power and efficacy. and for that 1 / 5 bis central bankers'speeches reason, if transfers of sovereignty to a supranational body were the best way to deliver peace, wealth and security, then he did not see that as constraining the sovereignty of nations, but rather as merging and extending it. but monnet was nonetheless anxious to ensure that such transfers were perceived as legitimate by the people. it is interesting in this context that he preferred not to use the word “ supranational ”, perhaps because it was too susceptible to being misunderstood as a policy that removes control from citizens. 4 he therefore deliberately opted for a gradual approach based on the principle of subsidiarity – what he called initiatives in a limited, but decisive area. precisely because pooling sovereignty had to be seen not just as effective, but also under democratic control, european integration could only happen if it focused on areas where there was an immediate need and where it could augment the existing governmental or intergovernmental policies. yet this pragmatism should not be mistaken for a random approach to integration. monnet also argued that a clear sense of direction was vital to the overall trajectory – that “ the route that we take is less important than the direction we travel in ”. 5 indeed, the fact that union in europe began in the limited area of economic cooperation – coal and steel – does not mean that it was not intended to be a political union. for monnet, economic integration was always a foundation of political union, with the single market leading to the single currency and eventually a federation. thus from the very start he affirmed the political nature of the european project, and consequently the importance of the democratic underpinning of

its institutions – insisting that the new pan - european executive be subject to the double scrutiny of a parliamentary assembly and a fully - fledged court of justice. he also advocated that the new institutions have the “ transparency of a house of glass ”. 6 2. why working together remains essential since then, the monnet method of common decision - making within common institutions has spread across several fields in europe. a growing number of countries have pooled sovereignty in a broad range of areas, including, as regards my own institution, money and banking supervision. democratic controls have increased in tandem, not least through the role of the european parliament. but we know that european integration still raises doubts. some question whether, with war in europe now unthinkable, working together within common institutions remains the best solution to the nature of the challenges we face. yet if we apply monnet ’ s rationale for common action – to make states more effective in delivering their remit – the answer to that question is clear. his approach is even more necessary now than it was then. and this is for three key reasons. the first is the relative decline in the weight of european countries in global affairs. in motivating the case for a common approach, monnet wrote in 1954 that “ our countries have become too small for today ’ s world, faced with the … america and russia of today and the china and india of tomorrow ”. 7 this was at a time when europe represented 37 % of global gdp and 13 % of the world ’ s population. today, the figures are 24 % and 7 %. it has therefore become even more important that european countries are able to pool their resources and exploit economies of scale. the second reason is changes in the structure of international relations linked to technology and the environment. 2 / 5 bis central bankers'speeches over the last 60 years, the increased power of technology and the impact of humans on the natural environment have created an increasing number of areas where traditional borders are being eroded. these include the spillovers of climate change, the effects on government budgets of more mobile capital, and terrorist threats that transcend physical and virtual borders. in each case, governments can only take effective action by acting together as a union. the third reason is our commitment to open trade. open trade is not imposed on us by nature or technology. but it has now become so profoundly crucial to our prosperity that no country can close itself off from trade without committing a profound act of self - harm :