viable financial system. on the other hand, investments imply a long - term outlook, whereas high and volatile inflation or fragile financial sector hampers long - term planning. moreover, the recent global crisis has shown that it is far cheaper to prevent financial instability than to rescue financial institutions in distress. financial crises are even costlier in emerging economies than in industrialized countries, as their ability to bear such costs is severely constrained by spillovers between the banking system and sovereigns and the related vicious circle of escalating risk premia. bis central bankers ’ speeches the crisis has also revealed that effective policy remedies have a transnational perspective. in the european union the idea of a banking union emerged as a solution to break the above - mentioned vicious circle, thus putting a stop to financial fragmentation and helping restore the normal capital flow from the core eu countries to the periphery. in addition, the banking union has the merit of removing the contradiction between the pan - european nature of banking activity and keeping banking supervisory and resolution tasks at the national level. in this context, romania ’ s membership in the banking union comes as a natural choice, given that euro area banks hold three fourths of the total assets of the romanian banking system and two thirds of its capital. as was the case with eu membership, the national interest may be better served in the banking sector by relinquishing some of the national policy prerogatives. in the context of such a high financial integration, preserving the banking supervisory powers at national level would only entail suboptimal results, due to the limited access to information on parent banks and the lack of a cross - border perspective. furthermore, romania ’ s membership in the banking union would ensure the country has an active voice in the decision - making process ; as such decisions would affect it anyway, regardless of its membership status. i will end here my brief comment. once again, we take pride in hosting what will be a substantial dialogue about the role romania will take within the transatlantic renaissance as a faithful partner and ambitious player. i wish you fruitful discussions and to enjoy the leadership awards and gala dinner tonight, hosted in the beautiful marble hall of the old palace of the national bank of romania. built in the late half of the 19th century, following the french architectural style, it has harbored the central bank from the moment it was founded. the national bank of romania is the 16th oldest central bank in the world, established 33 years before the federal reserve. i

a universal medicine, and it cannot work in isolation. jens weidmann, the president of bundesbank, once made an analogy between monetary policy and coca - cola ’ s all - round curative properties : monetary policy is also currently being branded as a cure for assorted ills. as well as its own actual mandate of keeping prices stable, some people seem to be under the impression that it should be used to strengthen growth, lower unemployment, safeguard the financial system and guarantee citizens adequate interest rates ” 3. yet, monetary policy can only buy time for structural reforms in the short run, while tensions are accumulating in the background. one major source of tensions refers to the wage policy. chapter 2 of reo discusses in much detail the “ european wage dynamics and labour market integration ”. the main messages of this 2 / 5 bis central bankers'speeches part can be summarized as follows : a ) in eu 15 wages are subdued because they respond very slowly to changes in unemployment and are closely related to inflation and inflation expectations, which are unusually low ; b ) in nms wage growth responds very quickly to changes in unemployment, and inflation expectations play a lesser role ; c. ) average wage increases in nms were much higher since 2012 than in eu - 15 ; d. ) about one quarter of wage growth in europe can be explained by eu - wide and group - level factors ; e. ) there was a decrease in unemployment, but also an increase in involuntary part - time employment ; f ) migration plays a role in the faster increase in wages in the countries of origin. one hot debate topic in europe these days – reflected in the report - is the flattening of the philips curve. subdued wage growth, together with subdued inflation, are presented among the risks in the euro - area – while the divergent wage growth trends between euro area and emerging europe are considered to reflect differences in labor market slack. alternative explanations provided by recent international literature for the disappearance of the philips curve refer to under - measuring the amount of spare capacity ( slack ) in the labour market ; a lower natural rate of unemployment ; lower or more anchored inflation expectations ; and changes in expectations of real pay growth. the imf ’ reo presents an innovative econometric model reshaping the wage philips curve against a measure of unemployment gaps. this shows that the philips curve is flatter in the euro area than in the nms, but that in general it still works. however, caution in interpreting