platforms have been introduced. • establishment of a secondary market for npl servicing and sales. the bank of greece has already authorized 14 non - bank npl servicers, with some portfolios being transferred for servicing either by banks or by purchasers of npls. the sale of loans has also been largely liberalized and €12 billion of npe balances ( nominal value ) have been sold to third party investors. these developments make it clear that the domestic banking sector has experienced a sea change in the way it is structured, monitored and supervised. some of these changes were costly and painful : for instance, resolving more than a dozen banks was never going to be pleasant ; neither were three rounds of recapitalization, with substantial effects upon private and public equity holdings. however, these initiatives helped both systemic banks and less significant institutions in greece to build significant capital adequacy reserves and buffers. moreover, one of the effects of the crisis in the greek banking sector has been the fact that it has been subjected to a series of tests. in fact, since 2010, greek banks have been subjected to stress tests six times, four of them accompanied by full blown asset quality reviews. these exercises have been cumbersome and substantial amounts of time and resources have been consumed. these exercises have nonetheless had a few major advantages : first, credit losses have been calculated and recalculated and the possibility of having unanticipated losses is now smaller than ever. secondly, as a result of a mandatory adverse scenario, buffers for potential additional loan losses have been specified and banks have raised high - quality regulatory capital to support these buffers. moreover, it is not surprising that greek banks ’ provisioning policies have been radically changed since the asset quality review ( aqr ) methodology was implemented and total losses were recalculated according to anticipated loss drivers. lessons learned from the greek banking crisis thucydides, the great ancient greek historian, considered his writings as “ a possession for all time ” for as long as human nature remains the same. in this vein, we ought to carefully consider what we have learned from the deep and prolonged greek banking crisis. the first lesson is that a well - designed and decisive policy response can mitigate the impact of 4 / 7 bis central bankers'speeches shocks. the bank of greece along with other greek authorities and the european institutions was involved in the establishment of the hellenic financial stability fund ( hfsf ) and in securing the appropriate

that are favorable to the well - functioning of the union. 1 the experience of the euro area has demonstrated that a common currency can affect an economy ’ s characteristics through at least two channels. these channels operate through enhanced credibility, and trade and financial integration. in what follows, i will discuss each of these channels in turn. how does the credibility channel work? a major benefit of participating in emu, especially for countries such as greece, italy, portugal, and spain that have had recent histories of relatively - high inflation rates, has been the credibility gain derived from eliminating the inflationary bias of discretionary monetary policy. since there is no devaluation risk, and no need of an interest rate premium to cover the risk of devaluation, nominal and real interest rates are lower than otherwise. low and stable inflation and inflationary expectations lengthen economic horizons, encouraging a transformation of both the financial and real sectors. let me now turn to the trade - creation effects of a common currency. recent empirical evidence has shown that a common currency ( as opposed to separate currencies tied together with fixed exchange rates ) can also promote trade 2. the basic intuition underlying this view is that a set of national currencies is a significant barrier to trade. in addition to removing the costs of currency conversion, a single currency and a common monetary policy preclude future competitive devaluations, and facilitate foreign direct investment and the building of long - term relationships. these outcomes, in turn, can promote ( over - and - above what may have been attained on the basis of the elimination of exchange - rate uncertainty among separate currencies ) reciprocal trade, economic and financial integration, and the accumulation of knowledge. greater trade integration can increase growth by increasing allocative efficiency and accelerating the transfer of knowledge. the euro - area ’ s experience indicates that the euro has indeed acted as a catalyst for trade integration. intra - euro area trade in goods increased from 26 % of euro area gdp in 1998 to 33 % in 2006. intra - area trade in services has also risen. recent empirical work has shown that similar increases in trade have not taken place among european countries which did not adopt the euro 3. for a survey of this literature, see degrauwe and mongelli ( 2005 ). see rose and stanley ( 2005 ) for a survey of the literature on the trade - creation effects of a common currency. see baldwin ( 2006 ). the euro has also had a positive effect on