banking union, stronger integration in the fiscal realm did not result in the establishment of effective fiscal instruments and institutions at european level to ensure stability. that ’ s why, as a second priority, work needs to continue on designing a more complete fiscal architecture. despite many reforms, the common fiscal rules that should deliver this outcome have lost traction. 4 europe, therefore, needs to regain faith in its fiscal rules by having a frank discussion on how to make them more effective and anti - cyclical. the rules themselves will, however, not always be enough because sound domestic policies are not always enough. markets do at times overreact and penalise sovereigns over and above what may be needed to restore a sustainable fiscal path. this is why there is also a need for public risk sharing through a stabilisation capacity. designing a stabilisation instrument for the euro area is neither straightforward nor easy. but that should not be an excuse for avoiding such a discussion and for taking concrete steps towards establishing it. proposals have already been put on the table, for example in the form of a fiscal capacity with a 4 / 7 bis central bankers'speeches direct focus on stabilisation in the shape of investment protection or an unemployment insurance mechanism. other suggestions refer to a common budget that can provide public goods through spending on joint investment projects or the broader political aims of the european union, such as defence. regardless of the exact form, it is vital that any euro area fiscal instrument comes with powerful incentives to counteract moral hazard, avoid permanent transfers and ensure sound policymaking at national level. bolstering long - term growth through structural reforms and allocative efficiency the elements i have discussed so far – notably, more stable financial integration and common fiscal instruments – can provide a shield against events that trap countries in downward spirals. long - term economic growth, however, is ultimately derived from increased allocative efficiency and innovation, which can only be achieved by modernising the euro area ’ s economies. looking at the last 15 to 20 years, euro area countries with sound economic structures from the outset have shown much higher long - term real growth and are more resilient. some euro area countries adopted ambitious reforms during the crisis and they have also seen good results afterwards – and the full effects are still materialising. nevertheless, over the past five years, structural reform implementation in the euro area has overall been sluggish at best. very few reforms identified at the european level have been substantially implemented in the last

few years. reversing this trend and putting our economy on a higher convergence trajectory is thus a priority. as structural reforms remain essentially in the hands of national governments, those governments should be the first ones to step up their efforts. nevertheless, european policies, if further developed, can be a significant catalyst and provide a strong engine for both growth and employment, in various ways. first, there is scope for a better use of the eu ’ s budget. the discussions on the 2021 - 27 multiannual financial framework offer a vital opportunity to enhance its role in addressing europe ’ s structural challenges. second, the single market as an engine for convergence should be used to its fullest potential. for consumers, the single market has already boosted competition in markets across the eu yielding large benefits for consumers. 5 but also on the supply side, the single market provides large productivity dividends by encouraging the integration of european value chains into global chains. these chains have resulted in higher wages at all skill levels. how can these positive effects of the single market be further harnessed? for one, by completing it and expanding its reach into new policy areas, notably services. services make up over 70 % of total eu gdp but only 5 % relate to cross - border services. 6 expanding the market will drive economic progress, to the further benefit of consumers, businesses and the economy as a whole. conclusion let me conclude. we have gone a long to repair the flaws in the financial, regulatory and supervisory framework which led to the crisis. we have taken bold steps to ensure that the euro is able to withstand future shocks. 5 / 7 bis central bankers'speeches reform fatigue always sets in over time. after all, the first calls to reform the international banking rules were made directly after the crisis in 2008. 7 this year, ten years on, we are finalising the last details of these reforms, which won ’ t all be fully implemented until 2028, 20 years on! 8 similarly, the srf is only being gradually built up and will not reach the target level until 2024, ten years after the implementation of the srm regulation. reforms take time. but we should not stop now. minsky9 taught us that good times breed complacency, exuberance and optimism among market participants. they can also lead to complacency among public authorities. while we cannot say that we are completely out of the woods, economic growth in the euro area is currently solid and broad -