It can provide financial assistance to Member States in difficulty, thereby reducing threats to financial stability in the euro area as a whole. But we need continuous efforts, particularly in the area of financial policies. The “Four Presidents” of the EU were mandated to provide a vision for Europe. In the context of our discussion today, I would say that they were tasked with identifying and outlining the minimum conditions to ensure the full viability of the euro area – which are the same as the minimum conditions to ensure continued trust in the euro. Four pillars have been identified: a banking union with a single supervision and common resolution framework; a fiscal union to prevent and correct unsustainable fiscal paths; an economic union that can guarantee sufficient competitiveness to sustain high employment; and a political union that can deeply engage euro area citizens. As I discussed accountability, let me say a word on the last pillar, political union. I think that the general issue here is to clarify who does what, to establish a network of responsibilities. The notion that the euro is a currency without a state is in my view misguided. The euro is a currency with a state – but it’s a state whose branches of government are not yet clearly defined. The ECB is part of the construction of Economic and Monetary Union, with a very clear but very limited mandate.
Then, and provided that precedence is respected, the ECB can support the economic policies of the EU on a broader scale. The legal formulation of the Treaty is an abstract determination of priorities. To define the objective precisely and establish a relationship between the objective and the policy – consistently conducted and communicated – a strategy is needed. 1  I wish to thank Tobias Linzert, Stefano Nardelli, Massimo Rostagno and Arthur Saint-Guilhem for their contribution to this speech. I remain solely responsible for the opinions contained herein. 2  Michel Aglietta: “Money: a matter of credit and trust”, Journées internationales d’économie monétaire et bancaire, Lyon, 6–7 juin 2002. BIS central bankers’ speeches  1  The strategy of the ECB makes the Treaty mandate more precise in three respects. First, it provides a quantitative definition of “price stability” by indicating a range for year-on-year changes in the harmonised index of consumer prices which the ECB considers consistent with conditions of stable prices. That does not necessarily mean zero inflation. The price stability range that the ECB considers equivalent to “stable prices” covers positive inflation rates lower than 2%. Second, the strategy identifies, within that range, inflation levels which the Governing Council of the ECB aims for, in its monthly policy decision. We aim at inflation rates that are below, but close to, 2%.