a lack of stability orientation in other policy areas. our task today is therefore to build on our strengths, to take what has worked and to reinforce it. this does not require that we map out an entirely new vision for europe. it requires that we complete our original vision – to fulfil the economic and monetary union ( emu ) based on price stability that we set in motion in 1999. where europe works so what has worked well in europe? first and foremost, the single market supported by the single currency. bis central bankers ’ speeches the benefits of having a single market and a single currency have been proven, especially in this country. germany ’ s trade with the rest of the euro area increased from around 25 % of gdp in 1999 to almost 40 % of gdp in 2012. and contrary to a popular perception outside of germany, its trade with its euro area partners is now broadly balanced. similarly, almost 65 % of foreign direct investment in germany now comes from the euro area, and half of german foreign direct investment goes to other euro area countries. over this period, value chains have also extended across europe. on average, around 40 % of foreign value added in euro area exports comes from other euro area countries. this means that increasingly we can talk about goods being “ made in europe ” – with the german mittelstand standing at the centre of those supply chains. this economic deepening means that it makes less and less sense to think of competitiveness in terms of countries – or of countries being better off alone. each eu country, even germany, is too small to get along in a globalised world. it is connections between firms across europe that will create our industrial strength and competitiveness in the future. and by the same token, the success of german firms is an asset to the rest of europe. our single currency, the euro, has been vital in reaping the gains of the single market. and it has put an end to competitive devaluations and trade wars between our countries. a key condition supporting this process of economic integration has been price stability. the ecb has delivered price stability continuously since 1999. and we will do so in the future. we have been successful in delivering price stability because we have a clear alignment of objectives and instruments – what is called by economists the “ tinbergen principle ” after the dutch economist jan tinbergen. we have a primary objective of euro area price stability that is established in the eu treaty. and we have

benoit cœure : the future of europe – building on our strengths introductory remarks by mr benoit coeure, member of the executive board of the european central bank, at the plenary session on “ the future of europe ”, during the fifth german economic forum, frankfurt am main, 6 december 2013. * * * summary : the crisis has raised some fundamental questions about europe and the future of the euro area. we need to go back to first principles and complete our original vision – to fulfil the economic and monetary union based on price stability. we know what has worked in the euro area : an allocation of tasks based on the primacy of price stability. and we know what has not worked : a lack of stability orientation in other policy areas. the ability of the central bank to deliver price stability ultimately depends on other policies being oriented towards stability as well. also, the ecb needs stable banks to be able to implement its monetary policy successfully. banking union will not be achieved by mutualising risks. on the contrary, banking union reduces risks for taxpayers. our common future cannot be found in the past. the world has changed too much in recent decades to go back. none of our countries are strong enough to survive alone. the euro area needs solidarity mechanisms for extreme events that are out of reach of national policies. but beyond that there is no strong case for further fiscal centralisation. fiscal discipline starts at home. governments have to take responsibility for delivering sound budgetary policies. germany also has challenges to confront to maintain its economic performance. one challenge is the effect of an ageing society on the workforce. another challenge is to raise domestic demand with reforms and investment. ladies and gentlemen, thank you for inviting me to speak to you today. it is an honour for me to speak in this place that played such an important role in german history. our intention today, however, is to reflect on the future – and the future of germany is tied to the future of europe. the crisis has raised some fundamental questions about europe and the future of the euro area. how can we restore stability and sustainable growth? what are the mutual responsibilities between different european countries, especially when they share a common currency? how can we take the people along? my main message today is that we need to go back to first principles. we know what has worked in the euro area – namely, an allocation of tasks based on the primacy of price stability. and we know what has not worked – namely,