spain reforms were less fast and comprehensive. in spain, for instance, slow implementation of labour market reforms meant that wages continued to rise until the third quarter of 2011, despite output falling by almost 5 % in that time. in greece, labour market reforms were enacted early on but without in parallel opening up product markets, meaning that when wages adjusted, prices did not : the price level only began falling in october 2012. the result was that these countries experienced a quantity adjustment – higher unemployment – which triggered a protracted disinflationary process that is still ongoing. 12 in sum, while both options have been costly in terms of output and employment, and notwithstanding differences in labour market flexibility, in a situation where countries had to undertake an internal devaluation, accelerating the pace of reforms seems to have been the better approach. it has led more quickly to higher growth prospects and higher current and expected inflation – i. e. conditions where the positive income effects of reforms can outweigh the negative real interest rate effects. this contrasting experience also, in my view, disproves the view that reforms should be staggered because political capital is scarce. we have seen that this type of thinking tends to lead to authorities avoiding taking on organised vested interests – such a protected sectors – and instead prioritising measures that affect a more diffuse group – such as lowering minimum wages. indeed, this is why, despite the eu - imf programmes proposing a comprehensive approach to reforms, product markets reforms have tended to lag labour market reforms. and the consequence is not only the mismatch between different measures that i just described. it is that reforms have often been perceived as unfair, which in turn undermines popular support for the reform process. so for those that still need to press ahead structural measures, including the large euro area economies, there are two key points to take from this. for a more in - depth discussion on the link between wage developments and labour market institutions see the aforementioned speech by mario draghi at jackson hole. bis central bankers ’ speeches first, talking vaguely about structural reforms, but not doing them, is the worst of all worlds. it creates uncertainty over the path of real interest rates, without in tandem raising expectations of future growth. second, while in “ normal ” times it might be acceptable to reform one sector at a time, in crisis times it is not. fairness must be a priority. and the best way to align vested interests is to reform them all at once. why

borrowing constraints and could therefore have financial stability implications and change households ’ reaction to shocks. i am happy to see that all three elements i just discussed are present in this conference. for instance, in your first session today you will be discussing how stock market participation depends on financial advice. in your second session, you will discuss how consumption reacts to mortgage interest rates. tomorrow, you will go deeper into issues of inheritance, household wealth and borrowing. i hope i was able to convince you that what you will be discussing in these two days is not only of purely academic interest, but also of importance for us policymakers. i wish you a fruitful conference and i look forward to your presentations and discussions. thank you.