Due to the recent events, therefore, researchers have focused their attention on testing for the endogeneity of optimal currency areas, further enriching the vast literature on the synchronisation of business cycles 4. This literature substantiates the conclusion of diverging real and financial cycles across member states, both during the pre-EMU and post-EMU regimes. The single monetary policy has not  2  D. Miles, Monetary Policy and Forward Guidance in the UK, speech given at the Northumbria University, Newcastle, 2013, D. Kapp, M. Vega, Real Output Costs of Financial Crises: A Loss Distribution Approach, MPRA Paper No. 38988., 2012, A. G. Haldane, The $ Billion Question, comment by Andrew G. Haldane, Financial Stability, Bank of England, Institute of Regulation & Risk, Hong Kong, BIS Review 40/2010. 3  Constâncio, V. (2015): Financial stability risks, monetary policy and the need for macro-prudential policy; speech at the Warwick Economics Summit, 13 February 2015 (https://www.ecb.europa.eu/press/key/ date/2015/html/sp150213.en.html). 4  Grigora, V., Stanciu, I.E. (2015): New Evidence on the Synchronization of Business Cycles: Is there an European Business Cycle?, National Bank of Romania, Macroeconomic Modelling and Forecasting Department, Bucharest University of Economic Studies; Basten, C. (2006): Business cycle synchronisation in the euro area: Developments, determinants and implications, Working Paper Series, Research Notes 22, Deutsche Bank research; Stremmel, H. (2015): Capturing the financial cycle in Europe, Working Paper Series, No.1811/June 2015, European Central Bank; Sybille, L. (2012): Has the Euro Changed Business Cycle Synchronization? Evidence from the Core and the Periphery, Ifo Working Paper No.

European and national authorities should launch a comprehensive strategy that combines a range of suitable tools to deal effectively with Europe’s NPL problems. A key aspect of that strategy will be aligning incentives between the parties involved: banks, investors and the authorities. A number of tools look particularly promising. National asset management companies (AMCs), if designed correctly, have been successful in relieving banks’ NPL burdens and recovering asset value. A blueprint for national AMCs in the euro area – essentially, a manual for setting up an AMC – would save authorities time and money. In addition to clarifying in detail how AMCs can be made compatible with the EU legal framework, such a blueprint should identify international best practices for key aspects of AMCs such as eligible asset classes, participation requirements, 1/2  BIS central bankers' speeches  asset valuation, capital and funding structures and governance. Apart from AMCs, securitisation schemes also have the potential to kick-start the NPL secondary market, but may require public intervention to signal that governments are determined to follow through with structural reforms that will improve asset valuations. NPL trading platforms or clearing houses should also be fully explored, even at euro area level, to increase NPL transparency and stimulate transaction activity. To be successful, however, all of these options require a considerable push for structural reforms related to debt enforcement and a reduction of information asymmetries. If these measures become credible, investors will recognise the shift in policy and should ultimately be willing to pay higher prices for NPLs.