to a large extent centralised. this however would require treaty changes and raises the question about a transfer union. for both, the appetite of governments and people is currently very low. furthermore, a pooling of fiscal resources, whatever their nature and size might be, only works if solidarity goes hand in hand with shared responsibility. likewise, greater risk sharing in the fiscal realm presupposes sufficient economic convergence among participating countries and the sustainability of public finances. and where competences are assigned to the european level, they should be part of the union method, with clear executive powers, full democratic accountability and rigorous judicial arrangements. conversely, we should avoid creating the wrong impression about what the union can do : loose coordination at european level may give the impression that a competence has been passed to the european level, when in fact it continues to be dominated by the power play among member states which is a pattern that has consistently failed to pacify the european continent. this perceived ineffectiveness further contributes to the loss of trust and credibility of eu institutions. therefore, responsibilities and accountability should be more clearly defined and aligned, similar to the monetary policy framework. i am aware that the attention of our policy - makers currently lies more on security needs than completing economic and monetary union. some of these proposals may also require treaty change for which there may be little appetite at the moment. but we should also not forget that europe will be better able to protect itself if it has a strong economy allowing it to address the concerns of europeans. ultimately, stability, prosperity and security are interlinked. not only between these three objectives of the union but also across european countries. we have common interests – and also common values –, which means there is no reason we should not see our identity and sovereignty as also european. thank you for your attention. 3 / 3 bis central bankers'speeches

exert downward pressure on orders, production, and exports of japan ’ s capital goods, in which the country has a competitive edge. b. developments in real wages the second key is developments in real wages. since the turn of fiscal 2014, the year - onyear rate of change in real wages has been negative, due in part to the substantial increase in the rate of change in the cpi including the effects of the consumption tax hike. meanwhile, there has been a somewhat weak recovery in consumption from the decline following the front - loaded increase prior to the consumption tax hike. i believe that the decline in real wages, in addition to the effects of irregular weather, largely accounted for the weak recovery. therefore, for private consumption to pick up clearly and maintain an increasing, albeit moderate, trend in fiscal 2015 and beyond, i consider it necessary that nominal wages rise firmly and that wages in real terms – adjusted for inflation – start rising on a year - on - year basis. on this point, let us look at recent developments in japan ’ s economy. corporate profits as a whole have been increasing, with some differences observed in the business performance between exporting firms – which benefit from the yen ’ s depreciation – and domestic demandoriented firms – against which the yen ’ s depreciation acts as a headwind. in view of the continued tight employment situation and of developments in prices, it is my consideration that the conditions are being prepared for wages to start rising in the form of increases in base pay and bonus payments. household income, i believe, will be a great driving force for bis central bankers ’ speeches supporting a virtuous cycle in the household sector from fiscal 2015 if, as a result of wage negotiations in spring 2015, nominal wages improve to an extent that will bring about a rise in real wages ; however, attention should be paid to the effects, for example, of the introduction of the macroeconomic slide formula to the pension system in japan from fiscal 2015. c. developments in exports the third key is developments in exports. real exports had been sluggish despite the substantial depreciation of the yen since the introduction of quantitative and qualitative monetary easing ( qqe ) in april 2013. a range of factors have been pointed to regarding the slow emergence of the j - curve effects ; namely, cyclical factors such as the sluggishness in emerging economies and structural factors such as the increase in the relocation of production overseas by japanese manufacturers. given these