be on everybody ’ s mind. in my speech today, i will talk mostly about these fears as they present themselves in europe, focusing on some of the economic factors behind the current surge in populism. my main message is that protectionism and confrontational politics pose a threat to our security and our welfare. they would divide our villages and weaken them. but our security and our welfare would be threatened just as much by sticking to the established regime of international trade and cooperation. that would mean overlooking the fact that economic change creates winners and losers in the village, thereby frustrating those who have lost the most. we need to find a middle way. 1 / 6 bis central bankers'speeches 2. election times : the euro area economy and rising populism so let ’ s start with europe ’ s current economic condition. since the financial crisis, the pace of recovery in the euro area has been slower than it has been in the united states, not to mention the emerging economies. lately, however, there have been signs of a broad economic recovery. for the euro area, recent figures held a positive surprise – with sound gdp growth of 0. 5 % for the first quarter of 2017. unemployment stood at 9. 5 % in march, down from its peak of 12 % in 2013. but a recent study has shown that the labour market in the euro area is in worse shape than the official job figures suggest, with workers unlikely to see real increases in pay because of the level of underemployment. 1 a measure of “ slack ” in the labour market indicates that about 15 % to 18 % of the euro area workforce are without jobs or would like to work more – which is nearly double the official unemployment rate. underemployment is even growing in weaker labour markets, such as those in france and italy. the still weak labour market in many regions of the euro area is one of the gravest ongoing consequences of the recent financial crisis and an indication that the recovery is still weak. this is particularly true with respect to the high level of underemployment in peripheral regions and among young people. thus, while the recent growth figures make the euro area economy look increasingly healthy, it becomes clear on closer inspection that a lot still remains to be done in order to move onto a sustainable, integrative path of prosperity. and that may already give you some indication as to why protectionism has been on the increase. ever since the uk vote for brexit

to set but rather in bringing existing rules and regulations into line with best practices, while giving due regard to a country ’ s specific circumstances. regional cooperation in building market infrastructure can also be an effective way of strengthening clearing and settlement systems. a regional central security depository that acts as a central access point to various domestic markets, providing multi - currency as well as delivery versus payment settlement, would be a possible alternative to a gradual expansion of cross - border links based on existing national systems. finally, in many emes, the securities clearing system is not keeping pace with the payments system in terms of its technological and legal development. improving the link between the payments system and the securities clearing system would be a major step in minimising transaction risks that occur when the buyer of a bond makes his payment days before the delivery of the bond takes place. the ultimate objective must be to accelerate settlement and to develop true delivery - versus - payment systems. it should also be mentioned that many of the existing barriers to an efficient clearing and settlement infrastructure relate to legal and regulatory issues. this underlines the need for close interaction between the private and public sectors. second, the legal framework : property rights and a tax system that is not overly complex or discriminatory are key factors in ensuring that markets are fair, efficient and transparent. a governance structure that enforces contracts and resolves disputes in a credible, speedy and predictable manner is vital for the development of sophisticated financial markets. given the problems of asymmetric information that are inherent in the financial sector, the regulatory framework should also set ambitious standards for auditing and accounting. disclosure rules that ensure the generation and dissemination of reliable information on a timely basis are particularly important. the oecd principles of good governance give appropriate guidance in this regard. let me emphasise that full implementation and enforcement of the corporate governance framework, information disclosure regulations and accounting and auditing standards and practices are as important as the laws and regulations themselves. third, the credit ratings : credit rating agencies play a major role in improving the price discovery process in bond markets, thereby furthering the growth of the corporate bond market. these agencies must be able to compile the necessary information to help investors assess credit risk and pricing spreads of corporate bonds. the rating standards of global agencies currently focus primarily on country risk. but they are less appropriate for evaluating the specific creditworthiness of particular firms in emes, which is a key ingredient for the development of corporate bond markets. there is an ongoing debate