It results from standard economic analysis that fast growing economies require a higher level of real interest rates to remain on a sustainable path. Monetary policy in the Euro area is designed for advanced economies and would be inappropriate for less developed economies. Indeed, a premature entry would imply a downward shock on interest rates and other policy parameters such as reserve ratios. This would generate supply/demand imbalances, credit booms and asset or consumer prices inflation resulting in financial vulnerabilities and deteriorating competitiveness. It should come as no surprise that the third element relates again to the advancement in structural reforms: these are preconditions for ensuring viable economic development inside a monetary union. Such reforms are necessary in order to enhance flexibility, thus giving the economy the necessary adjustment capacity required in a monetary union. The key role of structural policies naturally includes the conduct of fiscal policy reforms (tax, pensions, and social security) and investments in public goods (infrastructure, education, healthcare, etc.) that have to be completed before entry in order to provide enough leeway for fiscal policy to serve as a stabilisation instrument inside the monetary union. The New Member States that have joined the EU since 2004 have made considerable progress in nominal and real convergence. Recovering from historic episodes of economic contraction, hyperinflation and exchange rate depreciation, these economies have recorded gradual macroeconomic stabilisation characterised by disinflation, high rates of GDP growth and real exchange rate appreciation.

Spain has recently introduced various reforms to improve the effectiveness of bankruptcy procedures, though it is still too early to appreciate in full what additional reforms are needed to further improve those procedures. At the European level, I also welcome the Action Plan on Building a Capital Markets Union recently approved by the European Commission. This project envisages some measures to overcome information barriers that could inhibit SME lending. That includes, following the Spanish example, the strengthening of the feedback given by banks declining SME applications and the promotion of systems facilitating the availability for investors of comprehensive information on SMEs. Moreover, the Action Plan also foresees actions to reactivate securitisations markets. Let me stress the importance of this specific set of measures. For smaller firms, for which direct access to markets is not feasible due to problems of scale, bank credit will remain the predominant financing source. Therefore, an adequate availability of funds for SMEs requires banks to have sufficient means and capacity to properly conduct their intermediation activity. In that regard, the development of the securitisation markets seems a promising avenue to facilitate credit risk management by banks and, therefore, to support lending. Indeed, securitisation markets activity was seriously impaired after the subprime crisis due to the stigma attached to any kind of asset-backed securities, and the lack of recognition by investors and regulators of the specific quality of each product.