Draghi talked about the current situation in the euro area, the ECB's perspective on the topic of the conference, and about longer-term issues for the euro area.
In terms of the current situation, the euro area economy is still in a phase of adjustment. Real GDP fell by 0.6 per cent in the fourth quarter of 2012 and by 0.2 per cent in the first quarter of 2013. Output has thus declined for six consecutive quarters, labour market conditions remain weak and public and private sector balance sheet adjustments continue to weigh on economic activity. Unacceptably high levels of unemployment, particularly youth unemployment, are the prime concern of economic policy-makers.
Preparations for single supervision at the ECB are advancing, and naturally we are working closely with the relevant national authorities. Five work streams are underway: first, on mapping the euro area banking system to identify systemically important banks; second, on the supervisory model to be adopted, which is most likely to be centred around joint supervisory teams; third, on supervisory data reporting; fourth on legal issues; and fifth, on the asset quality review that we will undertake prior to taking any bank under supervision.
Formal adoption of the legal texts by the European Parliament will allow us to formalise the preparations and launch them so that we can be operational one year after adoption.
Effective supervision requires effective resolution, which in turn requires establishment of a single resolution mechanism. We count on the European Commission to make a proposal in due course.
Once these processes are launched, the banking union will be within operational reach. It should provide an answer to many of the challenges currently facing the euro area, including uneven credit conditions and the fragmentation of financial markets.
When observers from outside look at our Economic and Monetary Union, they often emphasise how unfinished it appears compared with fully established unions such as the United States. In so doing, they highlight a number of unresolved issues, for example that in a monetary union of 17 otherwise sovereign states, a credit or transfer across Member States is viewed differently from a credit or transfer within an individual Member State. The equivalent of Target balances, for example, is a non-issue in the United States. However, such observers vastly underestimate the political capital invested in the euro by our leaders, as well as the political significance that such an investment has for the future of Europe.
Of course, much work remains to be done for economic policy-makers across Europe. But I am confident that together we can build a stronger economic and monetary union that ultimately delivers jobs, growth and a return to prosperity for the citizens of the euro area.
Full speech
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