a whole. but on the other hand, prioritising risk reduction alone is likely to lead to the opposite problem : excess saving and fragile growth as countries are forced to self - insure by running persistent surpluses. the solution to the famous “ paradox of thrift ” is institutions. good institutions exist to ensure that people are not forced into actions that are rational at the individual level but self - defeating collectively. so, completing emu is about finding the right trade - off : enough protection against moral hazard to discourage under - saving, but enough mutual insurance to prevent over - saving. in this way, we could tap into new sources of growth that would otherwise be suppressed. and, in the spirit of this conference, that would truly represent a “ new approach ” for europe. 4 / 5 bis central bankers'speeches conclusion let me conclude. we face a global environment that is marked by uncertainty. but i believe that, if we approach this challenge in the right way, it can also be a moment of opportunity. we have a unique possibility to respond to a changing and challenging world by investing in our future, strengthening our common institutions and empowering the world ’ s second largest economy. all of this would be a game changer, not just for our own stability and prosperity, but for that of the global economy, too. it does require us to think differently about europe. it will almost certainly not be easy. but as st francis of assisi once said, “ start by doing what ’ s necessary ; then do what ’ s possible ; and suddenly you are doing the impossible ”. 1 september 2019 ecb staff projections. 2 see ecb ( 2017 ), “ china ’ s economic growth and rebalancing and the implications for the global and euro areaeconomies ”, economic bulletin, issue 7. 3 since the onset of the financial crisis, domestic demand growth in the euro area has averaged 0. 5 %, compared with average growth of 2. 3 % in the decade before 2008. 4 internal ecb analysis. 5 see anderton, r., aranki, t., bonthuis, b. and jarvis, v. ( 2014 ), “ disaggregating okun ’ s law − decomposing the impact of the expenditure components of gdp on euro area unemployment ”, working paper series, no 1747, ecb, frankfurt am main, december. 6 see lane, p. ( 2019 ), “ europe ’

also a second benefit to strengthening the domestic economy, which is that it facilitates rebalancing. more dynamic internal growth offers a way to improve the functioning of the euro area and to accelerate crisis recovery. since countries in a monetary union do not have their own exchange rates, they have to adjust to crises through prices. this is easier to achieve when growth is strong at the euro area level and inflation is in line with the ecb ’ s objective. adjusting countries can quickly improve their relative prices and export more to other members of the union. but if internal demand is too weak and inflation too low, such rebalancing across countries obviously becomes harder. and to some extent, this is what we saw in the euro area after the crisis. as demand was stronger in our trading partners, vulnerable countries had to reverse their imbalances mainly by increasing net exports outside the euro area. importantly, strengthening internal growth is fully consistent with all countries maintaining their competitiveness. if countries boost growth by investing in productive areas of the economy, it not only lifts demand in the short run. it also provides the ingredients for maintaining competitiveness in the face of long - run global challenges. so the question is, what can public policies do to further develop our domestic demand and growth potential, while also encouraging dynamic and globally competitive firms? policies to boost internal growth in my view, since our challenges are common ones, we must meet them with a common response. this involves moving towards a new european policy mix, which has a number of key elements. the first is monetary policy, which i start with because it is my area of responsibility and which will undergo a strategic review due to begin in the near future. the ecb ’ s accommodative policy stance has been a key driver of domestic demand during the recovery, and that stance remains in place. as laid out in the ecb ’ s forward guidance, monetary policy will continue to support the economy and respond to future risks in line with our price stability mandate. and we will continuously monitor the side effects of our policies. but it is clear that monetary policy could achieve its goal faster and with fewer side effects if other policies were supporting growth alongside it. one key element here is euro area fiscal policy, which is not just about the aggregate stance of public spending, but also its composition. investment is a particularly important part of the 3 / 5 bis central bankers'speeches response to today ’ s challenges, because it is both today ’ s demand