comparing italy to spain in june and july 2012. the situation was very similar. we were very close, we were on the edge … the situation was the same and the two countries took two different paths. spain decided to take an eu programme for the banks, whereas italy committed itself to making it on its own. do you think that decision explains the divergence between the two countries since then? again, i don ’ t want to make a direct comparison. the situation in spain in 2012 was different – the government had an absolute majority in parliament, we were lucky in that. and the clean - up of banks in spain was far - reaching. it was not easy ; it was bloody, i can assure you. but we did it and, after that, we were able to deal with an issue like banco popular. that was not easy, either. then, spain gained a lot of competiveness because of labour market reforms. those are the two factors. but i don ’ t want to make a comparison with italy. i am only focusing on spain now. by 2013 spain had started to grow again, and it has outperformed its peers for the last five or six years. so do you think frontloading that effort paid off? yes, i think so. in spain there was a government with an absolute majority, but even then we had a difficult time, politically speaking, after that. but in spain, regardless of the political party in power, the pro - european approach is guaranteed, even when you look at the two extremes, vox and podemos. they don ’ t question the euro. maybe they have different approaches regarding fiscal policy, but they don ’ t say they want to leave the euro. no, not at all. in fact, when you look at credit default swap ( cds ) markets, the implied probability of spain leaving the euro is very, very low. in the case of italy, it is not very low. is it possible, then, that part of the spread between bonos and btps is due to that redenomination concern for italy? again, it ’ s not a matter of making comparisons between countries. in the case of spain, the main reforms were labour market reforms and cleaning up the banks. those are the drivers of spain ’ s good performance, in my view. and those are the elements that have to be maintained over the coming years. de nederlandsche bank president klaas knot recently said

but in a union such as ours they are a clear common interest. euro area countries depend on one another for growth. and, more fundamentally, if a lack of structural reforms leads to permanent divergence within the monetary union, this raises the specter of exit – from which all members ultimately suffer. in the euro area, stability and prosperity anywhere depend on countries thriving everywhere. so there is a strong case for sharing more sovereignty in this area – for building a genuine economic union. this means more than beefing up existing procedures. it means governing together : shifting from coordination to common decision - making, and from rules to institutions. the second implication of the absence of fiscal transfers is that countries need to invest more in other mechanisms to share the cost of shocks. even with more flexible economies, internal adjustment will always be slower than it would be if countries had their own exchange rate. risk - sharing is thus essential to prevent recessions from leaving permanent scars and reinforcing economic divergence. bis central bankers ’ speeches a key part of the solution is to improve private risk - sharing by deepening financial integration. indeed, the less public risk - sharing we want, the more private risk - sharing we need. a banking union for the euro area should be catalytic in encouraging deeper integration of the banking sector. but risk - sharing is also about deepening capital markets, especially for equity, which is why we also need to advance quickly with a capital markets union. still, we have to acknowledge the vital role of fiscal policies in a monetary union. a single monetary policy focused on price stability in the euro area cannot react to shocks that affect only one country or region. so, to avoid prolonged local slumps, it is critical that national fiscal policies can perform their stabilization role. to allow national fiscal stabilizers to work, governments must be able to borrow at an affordable cost in times of economic stress. a strong fiscal framework is indispensable to achieve this, and protects countries from contagion. but the crisis experience suggests that, in times of extreme market tensions, even a sound initial fiscal position may not offer absolute protection from spillovers. this is a further reason why we need economic union : markets would be less likely to react negatively to temporarily higher deficits if they were more confident in future growth prospects. by committing governments to structural reforms, economic union provides the credibility that countries can indeed grow out of debt. ultimately, economic convergence among countries cannot be only an entry criterion for monetary union