To avoid that happening again, we need a deeply integrated financial system with well-capitalised intermediaries that are active across borders and benefit from the risk diversification options that the economic diversity of the euro area offers. Sound risk diversification within the euro area financial system will make the task of monetary policy easier even when confronted with common shocks.
Public and private risk sharing Having discussed the importance of financial integration for the transmission of monetary policy, I would now like to turn to the issue of risk sharing. There is an ongoing debate on the broader need for public risk sharing in monetary unions, and even on the need for fiscal capacity to strengthen macroeconomic stabilisation at euro area level.