responsibility for the outcome to the commission. yet at the same time the commission has limited powers in this domain. with effective european institutions, however, it is possible to make a more direct link between decisions and responsibility. precisely because those institutions are invested with defined powers, citizens can hold them accountable against their mandate. and in fact, strengthening these channels of democratic participation is vital for the euro area today. it is exactly the impression that there is too little accountability in europe that populist parties often exploit. in sum, my conclusion is that there must be a quantum leap in institutional convergence. we need to move from a system of rules and guidelines for national economic policy making, to a system of further sovereignty sharing within common institutions. and as part of this process we need to strengthen the democratic accountability of europe towards its citizens, which would automatically deepen our political union. let me however be clear : in the absence of institutions, rules act as a crucial anchor for confidence. so there is no question that the rules can be ignored because institutions would be better. on the contrary, they have to be fully respected so that we can make such a transition in the future. we have to build trust today by showing that what we agree to, we honour. and then we take the next steps forward as credible partners for each other. conclusion let me conclude. bis central bankers ’ speeches the euro area has advanced a long way as a monetary union. we began with a single market, a single currency and a single monetary policy. we now have a single supervisor and resolution authority. and soon we will have a single capital market. but we have not yet advanced far enough to put all questions about our future to bed. we need to remove those lingering doubts that resurface whenever a shock hits. and to do so we have to accelerate both our economic and institutional convergence. our monetary policy is helping to make this possible by creating an improving cyclical environment. but it is now up to governments to seize on this opportunity and make those improvements permanent. thank you for your attention. bis central bankers ’ speeches

only be said to exist [ … ] if and as long as free performance competition and free price formation are the motor and means of steering the economy. ” 10 in sum, there is evidence of stronger economic integration among the euro area countries. evidence of the completion of the single market looks promising, especially the rise in intra - euro area trade and integration in the money market. business cycles have become more synchronised. this is an encouragement to continue to work actively to enhance integration, notably in the provision of services, in labour mobility and in the integration in some segments of the financial markets. a lot of homework remains to be done in the euro area. border labour mobility within an enlarged eu ”, ecb occasional paper no 52, 2006. see also “ action plan for skills and mobility ”, european commission, 2002. the decline in inflation differentials has been impressive. at the beginning of the 1990s, the difference in inflation rates across the euro area countries was on average around 6 percentage points ( standard deviation measured in unweighted terms ). last year, the inflation differential was only 0. 7 percentage point. moreover, the current degree of inflation dispersion among the euro area countries is practically the same as that seen in the united states. as to real gdp growth rates across the euro area countries, the difference has been fluctuating around a level of 2 percentage points over the past few decades, with no apparent upward or downward trend. since 1999, however, it has declined from 2. 8 percentage points in that year to close to 1. 5 percentage points last year. again, the growth dispersion within the euro area is virtually the same as across the eight us regions defined by the us bureau of economic analysis. on output growth differentials see the article entitled “ output growth differentials in the euro area : sources and implications ”, in the april 2007 issue of the ecb ’ s monthly bulletin, and n. benalal, j. l. diaz del hoyo, b. pierluigi and n. vidalis, “ output growth differentials across the euro area countries : some stylised facts ”, ecb occasional paper no 45, 2006. on inflation differentials, see the article entitled “ monetary policy and inflation differentials in a heterogeneous currency area ”, in the may 2005 issue of the ecb ’ s monthly bulletin. see d. giannone and l. reichlin ( 2006 ), “