I can tell you now, in my view any meaningful revision of the European fiscal framework calls for a paradigm shift, rather than the incremental reform approach that has prevailed over the recent decades.3 Reform of the fiscal governance framework and the policy mix Starting with the reform of the fiscal governance framework, I believe that an optimal design and implementation of the European fiscal rules should fulfill the following three objectives. First, ensure debt sustainability and contribute to building up sufficient buffers in good times for use in subsequent crisis periods, especially against a backdrop of high public debt ratios. Second, provide for an optimal aggregate fiscal stance for the euro area as a whole. Third, offer support for long-run growth. In my view, the primary tools to achieve these objectives should be developed along the following lines: First, existing fiscal rules should be made simpler and more credible, and their governance should be strengthened. This is important in order to address one of the shortcomings identified in their design: the failure to ensure that countries build up fiscal buffers in good times for use in crises. Greater automaticity in the correction of deviations and affording a more prominent role to national independent fiscal institutions may be the right way forward.
And, in this regard, the link between the access to funds and the implementation of reforms should be seen as a crucial incentive. Allow me to also highlight the importance of insisting on a European, medium-term, economic growth-enhancing agenda. In this context, recent energy market developments and the global value chain bottlenecks highlight the importance of reflecting on the principles and way forward for achieving a European “strategic autonomy”. EU-wide structural policies promoting European integration and strengthening the single market will also make our economy more competitive internationally. The Important Projects of Common European Interest, developing new batteries and microelectronics, and those under way in the fields of Hydrogen and Cloud Infrastructure and Services, supported by NGEU funds, are good examples of this. Nevertheless, while it is important to promote these developments from a 8  European perspective, we should also keep in mind that increasing the scale of these projects might generate divergences across Member States. In order to make this compatible with a level playing field and to extract the advantages of economies of scale, it is therefore necessary to fundamentally improve our risk-sharing mechanisms and move further and faster towards a frictionless single market, both for capital and for labour. Banking union and capital markets union The final elements of reform I would like to mention today relate to the completion of the banking and capital markets unions.