This is my farewell speech at the end of my mandate as the ECB Vice President in May 2018. I addressed the problems with the initial design of Monetary Union, the challenges it is facing and the reforms necessary to improve its efficiency and robustness.

A text from May 2018 at the ECB and its Watchers Annual Meeting. I address the issue of monetary policy not being suitable to address serious financial stability concerns and why macroprudential tools are essential for that purpose. Following Lars Svensson methodology, the text shows an empirical application to the euro area, illustrating the costs of using monetary policy for financial stability purposes. Only in extreme circumstances should monetary policy be used to contain financial instability concerns.