We highlight the drastic downsizing of the ambition to deepen EU and/or EMU integration. These diminished ambitions are an obstacle to blending doses of risk reduction into national policies and pursuing supranational risk sharing initiatives. We maintain that the European Union, and mainly the euro area, cannot tolerate the related stalemate. Hence, our proposal is to concentrate economic and political efforts on producing a set of European public goods, which would be dependent on gradually enlarged and reorganized EU or EMU-controlled resources. By supporting growth, this could aid convergence processes between core and peripheral member states in the internal market and improve trust inside the Union, thus stemming the present dangerous trends of euro-skepticism and populistic nationalism. As of now, the banking and capital markets union still fail to provide the most important European public goods that they could offer. The public goods they can deliver would greatly help spur the search for a balance between risk reduction and risk sharing policies. This possible achievement is a preliminary step towards the solving of fundamental institutional and governance problems that must be overcome to build effective European economic and political integration. We propose a way to conceptualize the reform of EU institutions, with the goal of creating a federal union (not a federal state) with a neater supranationalization of certain policies and a clearer distinction between supranational responsibilities and policies that member states must enact with full autonomy. Italy is in a strong but delicate position to contribute to the short-term actions necessary for relaunching integration and has the necessary profile for launching a constructive debate on longer run institutional reforms, also as a way to celebrate the 60th anniversary of the Treaty of Rome.

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