stability levels required. it was hoped that the very fact of monetary union membership would activate sufficient response mechanisms. among these potential mechanisms, particular importance was accorded to the so - called “ competitiveness channel ”, which works as follows : when an economy ’ s inflation rate stands systematically above the average for the rest of the area, the very loss of competitiveness involved – or, what amounts to the same, the relative rise in the cost of output in that economy – tends to reduce demand - side pressures and ease the tensions on prices that led to the initial slippage. however, for this channel to work economies should, inter alia, be adaptable and sufficiently flexible, something which, for social and political reasons, is evidently not easy to achieve. it was also thought monetary union membership would prompt greater discipline in economic policy management. it was assumed that, if a member state ’ s management of the economic instruments available to it was inadequate, the subsequent adverse effects on its growth and employment - generating capacity would lead international investors to demand greater returns for investing in the country, or even to freeze such investment. the subsequent tightening of financing conditions would discipline economic agents and ultimately redress economic management. but this mechanism did not work because financial markets, rather than punishing divergences, instead financed excesses, contributing to exacerbating tensions. unsurprisingly, then, the crisis has called into question the consistency of the institutional arrangements underpinning the euro. the solution would involve a reformulation of the initial project, geared to fuller integration. bis central bankers ’ speeches the adaptation of the spanish economy to the euro was incomplete turning now to the spanish economy, our adaptation to the new rules of play derived from, or imposed by, monetary union has been insufficient and belated. our membership of the euro area compelled us to desist from long - established practices among economic agents who regarded exchange rate devaluation as the “ normal ” means of resolving the problems of competitiveness caused by inflation and did not consider fiscal discipline as vital for maintaining economic growth. true, in the years before we joined the euro area, we took steps to adjust economic policy rules to a low - inflation environment and set in train some reforms so it would function more flexibly. two factors were particularly important in achieving this goal. first, the anchoring of inflation expectations, which required fulfilment of the price stability convergence criteria. and second, in the area of budgetary policy, the

outlook. the debt - to - gdp ratios of non - financial corporations and households alike have continued to ease and are clearly below the peaks of the previous cycle in 2010, thus bringing spain ’ s ratio closer to the average euro area ratio. although private - sector deleveraging in spain may yet last for some time, it is reasonable to conclude that most of the adjustment has now been made. for the euro area as a whole, the gradual improvement in credit aggregates has continued in recent months with an increase, albeit moderate, in the loans extended to financial corporations and households. across the euro area, the slight easing in lending standards for firms and households can be seen to have continued, with the exception of those for household mortgage loans, whose standards have been tightened owing to the regulatory changes approved in several countries. bis central bankers ’ speeches in any event, most crucial for how the european financial and banking system will fare in coming years will be the macroeconomic setting. let me turn now to recent developments in and the outlook for the international and the spanish economies. the international economy international financial and economic developments have been characterised in recent months by heightened uncertainty. the main factors in this connection are : doubts over the intensity of the adjustment of china ’ s economy, and its consequences for international trade and the global economy ; the future timing and pace of us monetary policy normalisation ; and the course of oil prices. the global economy has continued to grow, although at lower rates. the projections in the imf ’ s latest report put global growth at 3. 1 % in 2015, 0. 3 pp lower than in 2014, and 0. 2 pp lower than the july projection. noteworthy is the change in the composition of global growth in response to the slowdown of the emerging economies compared with the greater resilience of the developed countries. the situation in the united states, where the economy is in a cyclically more advanced position and employment levels are close to their structural low, is conducive to the federal reserve normalising monetary policy. however, the absence of inflationary pressure, the downturn in and uncertainty over the global economy, and doubts about when interest rates will begin to rise all cast a shadow which has prompted very mixed expectations. as for developments in emerging economies, the slowdown in china, sharp adjustments to its share prices and the depreciation of its currency during the summer have heightened the risks of a steeper - than - expected fall in activity, with effects on