include a revision of the accession criteria, which could affect the possibilities of the cee countries of becoming euro members. but even if this is the case, these nations seem to be in a privileged position. cee countries will have more time for evaluating the net benefits of joining the euro and can prepare themselves for such a step, should they opt for it, and complete requirements for convergence and other conditions deemed beneficial. also, in the meantime, cee nations will be able to rely on exchange - rate flexibility and monetary policy to face any idiosyncratic shocks. for an analysis of the u. s. federal government´s refusal to bail out states in the 1840s, see sargent, t. j. 2012, wall street journal, “ an american history lesson for europe ”, february. see, for example, european commission 2010, europe 2050. bis central bankers ’ speeches at the same time, cee economies will likely deepen their integration with western europe because of their geographic proximity. it is well known that further economic gains can be achieved from monetary union membership. but if business integration is reinforced over time, the case for these countries ’ incorporation into the emu will be even stronger. 3 and there is always the possibility for these nations to unilaterally adopt the euro as a legal tender, as some small economies have already decided to do. the impact on the world economy the prospects for the growth of the global economy remain dependent on the strength of international trade and investment flows. in the next few years, world economic growth will likely be led by developing countries, while the developed nations will continue to exhibit lower rates of expansion. this dual - velocity path is consistent with the fact that emerging economies should grow faster than mature ones, since they have a wider set of investment opportunities to exploit. more importantly, however, is the fact that many advanced nations will have to implement restrictive fiscal measures in order to ensure debt sustainability. as a consequence, the share of emerging economies within global gdp and trade will likely continue to expand. 4 given the importance of the eu, however, developments in europe will continue to be a determining factor in the economic outlook of many countries. specifically, there is high business interdependence between the united states and europe, as they hold the largest trade and investment bilateral relationship in the world. furthermore, u. s. banks are highly exposed to european assets, and european banks have an important presence in the u. s. financial system. therefore

mechanisms, and bank support programs, among other factors. borrowing costs for troubled issuers have risen significantly above pre - crisis levels, adding to the burden of fiscal pressures. widening yield spreads on sovereign bonds, however, seem to better reflect the situation of individual credit risks in a manner which is consistent with the absence of a safety net, as originally envisioned in the “ no bailout ” clause of the maastricht treaty. it is worth noting that actual and potential rescue programs seek to restore the confidence of investors in the emu. as usual, these packages will have to be evaluated in terms of their effectiveness in containing the crisis and their possible unintended consequences. it is not unreasonable to expect that a bailout of one country may generate the speculation of a bailout of another country, provoking financial contagion. bis central bankers ’ speeches in the context of the limited resources available and the tensions stemming from the distribution of funding costs for ever larger rescue plans, bailouts could become self - defeating. one possibility for limiting moral hazard is to incorporate in all programs some degree of debt restructuring, which in turn may affect banks ’ balance sheets. the implementation of such initiatives is itself very challenging, particularly when official institutions become significant holders of problematic debt. a second urgent problem is the lack of competitiveness shown by some economies, especially in peripheral countries, reflected in the difficulties they have had correcting large current account deficits, which are inconsistent with capital outflows. because the euro nations cannot resort to currency devaluation, wage flexibility and productivity - enhancing reforms are the only significant tools available. labor mobility and the moderation of consumer lending are complementary means. in view of the fact that labor mobility in the euro zone has been much lower than what is customary in a federation of states such as the united states, homologized labor laws in the euro area seem warranted. indeed, aside from language and cultural problems, which may not be the most significant obstacles in light of other international migration experiences, the size, heterogeneity and lack of portability of labor benefits could be a major discouraging factor. also, other structural reforms may require international coordination, such as unified liberalization of remaining trade barriers in the services sector. for the medium term, three institutional issues stand out. first, the integrity of the european central bank should be respected given the key role the bank has played in the emu and its excellent record on price stability. the absence of