In this context, let me point out that the Lisbon European Council in March 2000 emphasised the need for economic reform, whose implementation is a key condition for the EU to achieve its strategic goal "to become the most competitive and dynamic knowledge-based economy in the world". The follow-up to the Lisbon strategy is ensured by an annual spring European Council meeting, the first of which took place in Stockholm earlier this year. These follow-up initiatives are also reflected in the recommendations of the Broad Economic Policy Guidelines. It is sometimes argued that the euro area can only become a very strong and dynamic economic entity if supported by a fully-fledged political union. I have argued today that there are good reasons that this may not be true. The current policy constitution in the euro area, despite its novelty and uniqueness, is a sound and efficient framework which provides a good basis to ensure that, even without full political union, the euro area can become one of the most dynamic economic areas in the world. BIS Review 61/2001  5
This is why our focus should be on the Eurozone economic governance and coordination. We know there is deep political resistance to sharing fiscal resources and sovereignty, as well as a rising Euroscepticism. This is why we need to make the economic case. This discussion is not about “more Brussels”, but it is very concretely about more growth and jobs in Europe. The euro crisis has revealed how unprepared we were. The absence of coordination has indeed a genuine economic cost. Several approaches point to a significant cost of noncoordination, in the order of 2 to 5 % of GDP since the crisis, and therefore millions of jobs. To bring the debate forward, some principled choices have to be made. First: making parallel progress on both domestic reforms and, [not “or”], European coordination. This is the cornerstone of, for instance, any French-German agreement: to be fair, the French call for Germany to support coordination, and the German doubt about French reforms, have been and are still well-founded. This requires overcoming distrust between countries and bringing together both aspects under the same umbrella, namely a common institution. Second, we must recognize that institutions with a mandate are superior to rules without institutions, as underlined by Mario Draghi while discussing the fundamental difference between a monetary policy institution and fiscal rules. To bolster policy consistency and coordination, we admittedly need simpler rules. But they should be supported by strong institutions with discretionary powers.