Building an efficient financing and investment union for tomorrow  We need to improve investment financing in the EU. Our efforts should be directed towards financing growth and innovation, and towards finding the right mix between debt and equity financing, while still preserving financial stability and consumer protection. In the EU, the European Commission has launched the Investment Plan – so called Juncker Plan – and the Capital Markets Union (CMU). Until now, these initiatives have shown results, but they are not enough. A more ambitious approach would bring together the CMU, the Banking Union and the Juncker Plan. This is why I suggest to think of a Financing and Investment Union. It is essential to clarify two objectives: (i) the diversification of financing for firms, and (ii) the strengthening of the euro area. As we argued in our joint article with Jens Weidmann in February, this Financing and Investment Union – including more equity financing – seems to be the best way to match the abundance of savings and the lack of appropriate investment financing. First, let’s focus on the diversification of financing. The starting point should be firms’ needs. New financing of business investment, which is one of the keys to innovation, must be enabled. There should be above all, more equity financing. •  It is an essential fact that the equity share of corporate financing in Europe is half as large as in the United States: 52% of GDP in the EA, vs. 121% in the US.
It’s easy to think of the Fed as just setting interest rates, and of course that’s a major part of what we do. But we do so in order to achieve two goals set by Congress: maximum employment and price stability. In Fed-speak it’s called the dual mandate. There are serious debates taking place amongst economists and policymakers about what maximum employment actually looks like, and they probably deserve another speech of their own. But I promised not to deluge you with numbers, so I’ll focus on a few highlights. The unemployment rate last year averaged just under 4 percent, the lowest such annual figure since 1969. The latest jobs numbers also showed very strong growth, with over 2.6 million jobs added last year. The ongoing strength in the labor market has led to encouraging gains in wages. No matter how you cut it, the labor market is strong, consistent with our maximum employment goal. When we say price stability, our goal is to keep inflation around 2 percent.1 Those of you who are of my generation will remember the runaway inflation of the 1970s and early 1980s. Obviously that’s something we must avoid repeating. But the challenge of more recent years actually hasn’t been too high inflation. Instead, it’s been inflation that’s persistently too low. Over the past decade, inflation has more often than not come in below our goal. But things are looking better.