MILAN, March 19 (Reuters) - European integration needs to be improved and the region's economic policies better coordinated, European Central Bank board member Lorenzo Bini Smaghi said in a letter to Italian daily La Repubblica published on Thursday.
"We must continue to strengthen the process of integration and improve the coordination of economic and financial policies," he said in the letter to the newspaper, replying to a previous letter by Nobel prize-winning economist Paul Krugman.
Bini Smaghi said not everything was perfect in Europe but added that progress must be based on what has already been constructed, "in particular the euro".
He said he was answering criticism from Krugman in a letter published last Tuesday saying Europe had made a mistake 10 years ago when it adopted the single currency.
Bini Smaghi said Krugman's idea that it is best to have a single government to make decisions rather than 16 governments had not stopped the failure of Lehman Brothers in the United States. He described Lehman's demise as "the most devastating decision of recent months". (Reporting by Stephen Jewkes; Editing by Jan Dahinten)