mario draghi : the future of the euro – stability through change contribution from mr mario draghi, president of the european central bank, published in “ die zeit ”, 29 august 2012. * * * across europe, a fundamental debate is taking place about the future of the euro. many citizens are concerned about where europe is heading. yet the solutions presented appear to them unsatisfactory. this is because these solutions offer binary choices : either we must go back to the past, or we must move to a united states of europe. my answer to the question is : to have a stable euro we do not need to choose between extremes. the reason this debate is taking place is not the euro as a currency. the objectives of the single currency remain as relevant today as they were when the single currency was agreed. to spread price stability and sustainable growth to all european citizens. to reap the gains of the world ’ s largest single market and make the historic process of european unification irreversible. to raise europe ’ s standing – not only economically but also politically – in a globalised world. the debate is taking place because the euro area has not yet fully succeeded as a polity. currencies ultimately depend on the institutions that stand behind them. when the euro was first proposed, there were those who said it would have to be preceded by a long process of political integration. this was because sharing a currency would imply a high degree of joint decision - making. member countries would be a “ schicksalsgemeinschaft ” and would need strong common democratic underpinnings. but a deliberate choice was made in the 1990s not to give the euro such features. the euro was launched as a “ currency without a state ” to preserve the sovereignty and diversity of member countries. this informed the so - called “ maastricht setup ”, which laid the euro ’ s institutional foundations. but as recent events have shown, this institutional framework left the euro area insufficiently equipped to ensure sound economic policies and effectively manage crises. for this reason, the way ahead cannot be a return to the status quo ante. the challenges of having a single monetary policy but loosely coordinated fiscal, economic and financial policies have been clearly revealed by the crisis. as jean monnet said, coordination “ is a method which promotes discussion, but it does not lead to a decision. ” and strong decisions have to be made to manage the world ’ s second most important currency. a

remains modest. both monetary and credit growth continue to be supported by the historically low level of interest rates in the euro area and may also reflect the improvement in the economic environment over the last few quarters. given the continued strength of monetary growth, liquidity conditions remain ample in the euro area. the impact of this high level of liquidity on inflation over the medium term will depend on future developments in the economy and financial markets. should excess liquidity persist, it could lead to inflationary pressures over the medium term. to sum up, the economic analysis indicates that the main scenario for the outlook for price developments over the medium term is in line with price stability. cross - checking with the monetary analysis does not alter this view at the current juncture. as usual, i also wish to make a few remarks regarding other policies in the euro area. with regard to fiscal policies, the governing council sees increased reasons for concern. on the basis of the latest commission forecasts, the average euro area budgetary position is not expected to improve much this year or next. a growing number of countries are likely to report significant imbalances, while fiscal consolidation efforts might fall short of commitments. it is essential that all countries concerned undertake credible measures to address these concerns. such measures should be part of a comprehensive reform strategy. this would underpin the ongoing economic upswing by boosting confidence in sound public finances and by improving the prospects for future economic growth. the governing council welcomes the decision by the commission to request more consolidation efforts from a number of countries. turning to structural reforms, the governing council reaffirms its view that such reforms are essential if the euro area ’ s growth potential is to expand substantially. in particular, both our employment rate and our labour productivity growth need to increase significantly. following our discussions here in finland, let me stress that this requires a strengthened technological and scientific base and its application in the euro area as a whole, fostered by major efforts to enhance the human capital of our economy. in this context, we are particularly concerned that youth unemployment remains high in several countries. in order to achieve these goals, it is necessary to strengthen the implementation of structural reforms, both at the european and the national level. the lisbon agenda provides an excellent diagnosis of the problem and we have a good understanding of the measures needed to deal with it. we strongly support the ongoing reforms, which should be speeded up across the euro area. it is important to understand that everyone will be better