That is because these shocks are very likely to fall on peripheral nodes unconnected with, and hence unlikely to cascade through, the system as a whole. But these  2  BIS central bankers’ speeches  systems are also vulnerable to targeted attack on the core nodes – the “super-spreaders” – whose hyper-connectivity risks generating a systemic cascade (Albert, Jeong and Barabasi (2000)). Another typical feature of complex systems is that they tend to organise themselves as a hierarchy, with a well-defined structure of systems and sub-systems (Simon (1962, 1976)). Herbert Simon believed hierarchical structures of a particular type were likely to dominate, namely ones which were “decomposable”. By this he meant organisational structures which could be partitioned such that the resilience of the system as a whole was not reliant on any one sub-element. 1 For evolutionary reasons of survival of the fittest, Simon posited that decomposable networks were more resilient and hence more likely to proliferate as a species (Simon (1962)). 2 While Simon’s evolutionary theory may be a reasonable long-run description of some realworld complex systems – natural and biological – it may be less good as a description of the evolution of socio-economic systems. The efficiency of many of these networks relies on their hyper-connectivity. There are, in the language of economics, significantly increasing returns to scale and scope in a network industry. These returns increase with network connectivity (Goldin and Mariathason (2014)). Think of the benefits of global supply chains and global interbank networks for trade and financial risk-sharing.

Although differences in income levels are not incompatible with EU, it is important for accession countries to improve real convergence before entering monetary union. Indeed, it is essential to preserve a high level of economic cohesion within EMU and appropriate economic integration between Members States, thereby helping to minimize the risk and the effects of asymmetric shocks, in the best interest of accession countries themselves. Let me stress five points of particular relevance for the Eurosystem, and for accession countries themselves on the road towards achieving catching-up and convergence with the EU. •  Firstly, we should never forget that nominal convergence must be sustainable and therefore constitutes a medium-term objective, rather than a short-term priority. The strict compliance with the Maastricht criteria will be key for joining the euro area. Indeed, the EU Treaty calls, as a prerequisite for adopting the euro, for a high degree of sustainable convergence in the fields of price stability, government fiscal position, stability of the exchange rate, and longterm interest-rate levels. The sustainability of nominal convergence itself presumes that sufficient preliminary progress has been made towards real and structural convergence (and namely having set a fully-fledged market economy, catching-up in income and productivity levels, as well as economic and social infrastructures, upgrading of the legal system…). Conversely, a sustainable catching-up process requires macroeconomic stability. Therefore, nominal and real convergence should be pursued in parallel, and are not antagonistic.