To be sure, the highest level of policy integration would logically involve building a genuine fiscal union, as well as completing the Single Market; but that would surely require more ex ante convergence and resolution of legacies from the past. My view is that we should leave the door open to further integration for countries that are willing and ready to consider it. I will come back to it, but first I would like to highlight what I consider to be the most urgently needed part of EMU reform, namely. 8  Peter Kenen, Currency unions and policy domains, Princeton University, November 2000. BIS central bankers’ speeches  5  II. How to set up a strong institution to fully coordinate national fiscal and structural policies. This institution is what would enable us to achieve the second level of integration, i.e. full coordination of national policies. In economic terms it would help internalise negative externalities (e.g. demand spillovers, or financial contagion) from asymmetric economic shocks across jurisdictions, as well as optimize positive externalities between fiscal and structural policies. In political terms it would help make the Euro area more than the sum of its parts. Jean Monnet famously declared that “nothing is possible without men, but nothing lasts without institutions”. I am convinced that establishing a strong institution led by a euro area Finance Minister would contribute to cement further integration of economic policy.
François Villeroy de Galhau: Europe at a crossroads – how to achieve efficient economic governance in the euro area? Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, recorded for the event at Bruegel, Brussels, 22 March 2016. *  *  *  Summary There is a growing perception of the need to rethink the economic governance of the euro area. Compelling ideas have been put forward to that effect; yet their implementation is tricky, especially in the present climate of Euroscepticism. Shifting from ideas to action has become urgent if monetary policy is not to remain the only game in town. Clearly, the single monetary policy cannot be a substitute for the coordination of national economic policies or the lack of reforms. To be sure, the debate over EMU reform is politically loaded; but for euro area citizens the poor coordination of national policies involves a high cost in terms of growth, of several points of GDP. The economic case therefore needs to be made: this discussion is not about “more Brussels”, it is about more growth and jobs in Europe. In addition, it is not a choice between domestic reforms or European coordination; we need both. Between complete integration – of the monetary-policy type – and monitored national policies, as currently conducted, the missing link is “full coordination” of fiscal and structural policies. This is clearly shown in a matrix crossing these three degrees of integration and the four policy dimensions (monetary, financial, fiscal and structural).