few years. this progress has been achieved through the large - scale privatisation of state - owned banks and the extensive opening - up of the banking sector to foreign ownership. this process has contributed to greater financial integration with the eu and significant gains in terms of efficiency and stability. however, the level of financial intermediation remains relatively low and the provision of bank financing represents a much smaller share of gdp in the accession countries than in the euro area countries. furthermore, the financial sector of accession countries remains dominated by the banking industry, as capital markets are not yet fully developed. from an ecb perspective, further deepening of the accession countries'financial markets is needed to ensure the proper transmission of monetary policy impulses once they join the euro area, and it may also help these countries make full use of their growth potential. coping with any of the three challenges which i have just mentioned will have a significant impact on the design of monetary and exchange rate policies. taking into account the different starting points and progress made so far in addressing these challenges, accession countries may well pursue different approaches in the pre - accession phase. once in the eu, however, there is a clear path defined in the treaty that should be followed by all eu member states towards the adoption of the euro. first, immediately upon eu accession, the new member states have to treat their exchange rate policy as a matter of common interest. furthermore, in view of the final objective of adopting the euro, accession countries are expected to join erm ii at some point following accession to the eu. most accession countries have already expressed their intention to join the mechanism as soon as possible after their entry into the eu. however, it should be clear that erm ii membership does not need to happen immediately after eu accession in all cases, nor does erm ii membership need to be limited to only two years, which is the minimum for adoption of the euro. a longer membership of erm ii may, in some cases, be helpful since it would allow countries to retain the exchange rate as an instrumental policy variable during the catching - up process. participation in erm ii should thus be seen as a meaningful and flexible framework for increasing convergence with the euro area, and for tackling the challenges faced by accession countries on the road towards the adoption of the euro. finally, after having outlined the path along which the euro will go east, i would also like to say a few words about a path which i am confident will not be followed a

for this current resources boom. one point of difference is the share of foreign ownership of the resources sector. while it is difficult to get reliable estimates of this share, it appears to have increased over time. 13 this means that less of the extra revenue associated with both existing and new resource ventures will accrue as profits paid to australian residents than might have been the case in earlier booms. 14 another point of difference with this episode is that liquefied natural gas ( lng ) projects will account for a large share of the additional production and exports generated by the boom in investment. by some estimates, lng exports will rise from less than half the value of coal exports currently to be worth more than coal exports in only a few years ( table 1 ). while lng projects require a substantial number of australian workers to help put the new extraction, processing and transport facilities in place, they require relatively few workers during the production phase. 15 this means that less revenue from the sale of resource exports will accrue to australian residents in the form of wages than would have been the case if more of the investment had been focused on other commodities. some estimates highlight the fact that foreign ownership of lng projects is higher than it is for iron ore and coal, and we know that lng accounts for a very large share of resources investment and is going to account for a substantial and increasing share of export revenues ( see connolly e and d orsmond ( 2011 ), “ the mining industry : from bust to boom ”, rba research discussion paper no 2011 – 08 ). similarly, about half of resources investment over the past decade has been undertaken by foreign companies ( see arsov i, b shanahan and t williams ( 2013 ), “ funding the australian resources investment boom ”, rba bulletin, march, pp 51 – 61 ). the difference in the ownership structure is even starker when comparing this episode with earlier times when the rural sector played a prominent part in commodity booms. during the korean war, the sectors benefiting from higher wool prices were largely, if not entirely, owned by australian residents, and were relatively intensive in their use of labour ; although this episode falls outside of the sample used to estimate the model. as a rough guide, the construction of an iron ore or coal mine typically requires around two to three times as many workers as are ultimately required to operate the mine. for a typical western australian lng project, the ratio is close to 10