If euro area economies had a greater level of resilience, they would also be more likely to react to a common shock in a similar way, thus reducing costly macroeconomic divergences which cannot be addressed by our single monetary policy. Developing sound economic structures and institutions would also lift potential output.
Second, as recently advocated by the ECB in its opinion on the establishment of a European Investment Stabilisation Function1 , the euro area needs a fiscal instrument to help maintain convergence in the face of large exogenous shocks, thereby also supporting the single monetary policy.