as st early as the 1 of January 2004. This provides further evidence of the attractiveness of the European framework, which has provided us with both political stability and economic progress for half a century. The accession countries have accomplished significant progress in stabilising and strengthening their economies and institutions. Observing the accession countries since the beginning of the nineties, we see the major improvements that these countries have made on the road towards convergence with the EU. Nevertheless, there is also general agreement on the fact that the gap in terms of average GDP per capita between the accession countries and the euro area, although diminishing, still remains quite significant. On average, GDP per capita in terms of purchasing power parity is around 44% of that of the euro area, while in terms of current exchange rates it is only around 22%. The size of the gap, combined with the limited growth differentials between the two groups of countries, suggests that the process of real convergence will be very gradual. Indeed, real convergence is essential to create economic cohesion within EMU and promote integration between Members States, thereby helping to minimise the risk and the effects of asymetric shocks. The Eurosystem, and notably the Banque de France, is following the enlargement process with a great deal of attention. Let me stress a few points of particular relevance for the Eurosystem and for  8  BIS Review 11/2003  accession countries themselves, on the road towards catching up with the EU and achieving convergence.

Most central banks have continued and/or accelerated their interest rate hikes, with the Fed's actions standing out. This has further tightened financial conditions, especially for emerging economies. Overall, risk aversion has increased, affecting asset prices and volatility in global financial markets. Risk premiums have increased: Higher CDS spreads across LATAM and other EMEs as well as higher interest rates. Higher market volatility: Option implied volatilities have increased during this calendar year, both in the US stock and bond markets. The tightening in global financial conditions is also apparent domestically. In the case of Chile, we have had a persistently weak exchange rate along with high 2 FX and interest rate volatility. During this year, the CLP has depreciated 15% and long-term interest rates (BCU10) increased 26bps. In contrast to pre-2019 situation when Chile ranked low in long term interest rate volatility. Additionally, non-residents have turned more sensitive to local events and have reduced their exposure to fixed income securities. The very recent days show a change in tone, both in Chile and abroad, thanks toe positive developments on inflation. But we must remain wary. The greater volatility of the FX rate and local interest rates occurs in a context of a shallower capital market, with a reduced ability to stabilize external shocks and a higher than historical uncertainty. In this environment, financial stability becomes even  1/3  BIS - Central bankers' speeches  more relevant, as doesthe need to keep up our efforts to restore the Chilean financial market and its shock-absorbency capacity.