Luis M Linde: Strengthening the economic governance of the euro - short-term priorities and the long-term view

Welcome speech by Mr Luis M Linde, Governor of the Bank of Spain (until 11 June 2018), at the High-Level Seminar "Strengthening the economic governance of the euro - short-term priorities and the long-term view", Bank of Spain, Madrid, 23 May 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Ladies and Gentlemen,

Let me first extend a warm welcome to you all to the Banco de España. Thank you for joining us today in this seminar that addresses the pressing and very important topic of the Economic Governance of the Euro: Short-term Priorities and the Long-term View.

I would like to thank the panelists who have been so kind to accept our invitation; we are very pleased to have among us a long list of distinguished participants that would certainly throw much welcomed light on the discussion.

The timing of this conference is particularly relevant. After years of low growth, Europe is now experiencing a robust recovery which opens up a window of opportunity to make progress in the governance reform agenda before the next economic downturn unfolds. Supported by expansionary monetary policy, real GDP in the Euro Area has expanded for 19 quarters in a row. Stronger price dynamics are yet to materialize, but we are confident that if we are prudent, patient and persistent, our monetary policy measures will be effective in achieving the medium-term goals.

Price stability is a necessary but not a sufficient condition for achieving sustained and balanced growth. In fact, one important lesson we can draw from the first twenty years of the EMU is the need to improve the area's resilience to large macroeconomic shocks and to increase its stabilization capacity.

In this context, we currently find ourselves at a crossroads in what refers to the pace of the governance reform agenda.

Despite evident progress since the peak of the crisis, the building of a more cohesive monetary union, as proposed in the Van Rompuy's Report of June 2012 (the so-called Four Presidents' Report) and in the Juncker's Report of June 2015 (the so-called Five Presidents' Report), is, we all know that, a very difficult task. As a matter of fact, there has been no significant step forward since the establishment of the Single Resolution Fund in June 2014.