, deterioration of financial conditions or a significant slowdown in the economic activity of the eu could affect the pace of economic recovery in the united states considerably. something qualitatively similar can be said about emerging economies. these nations have different degrees of integration with europe and, hence, they experience diverse impacts from developments in that region. as stated, the cee countries, as well as large nations such as china and india, are often the most affected by events in the eu. turning to my own country, approximately 8 percent of mexico ’ s foreign trade is with the eu, making this area mexico ’ s third - largest trading partner, after the united states and china. furthermore, during the last decade, the eu has been mexico ’ s second most important investment partner, contributing with almost one - fifth of total accumulated foreign direct investment. further deceleration of eu growth could hurt mexico ’ s economic prospects, indirectly if the u. s. economy slows as a result, but also directly through less dynamic exports of goods and services to europe, especially in vehicle shipments which are the most important export item, and lower european investment, likely in manufacturing and financial services, which have been the leading recipient sectors. regarding the latter sector, the mexican banks have healthy balance sheets and are well capitalized, but some subsidiaries of european banks could nevertheless be impinged by events affecting their parents. see, for example, frankel, j. 2008, “ should eastern european countries join the euro? a review and update of trade estimates and consideration of endogenous oca criteria ”, faculty research working papers series, harvard, kennedy school of government. for forecasts on different economies, see international monetary fund 2012, world economic outlook, october. bis central bankers ’ speeches concluding remarks the current financial crisis represents the first meaningful test of the emu. deep transformations are necessary in order to consolidate the long - term viability of the monetary union and the strengthening of the institutions supporting the eu. the challenges call for decisive actions implemented in a comprehensive way, since a piece - meal approach may weaken the credibility of the initiatives over time. although a breakup scenario cannot be ruled out for the emu, long - held integration efforts are a guarantee of the common willingness to find solutions to problems. cee countries are in an advantageous position since they have time to continue pondering the net benefits of joining the euro area while, at the same time, they can further integrate their economies with western europe.

in physical infrastructure, and enhancing public security. concluding remarks mexico has seen an incipient economic upturn this year, driven by stronger external demand and higher domestic spending. the panorama is favorable given more consistent u. s. economic performance and mexican structural reforms in the first stages of implementation. mexico ’ s economy has benefited from the continuation of portfolio capital inflows amid benign financial conditions, notwithstanding some recent volatility. however, a change in market sentiment could trigger a reversal of this relative financial bonanza at any moment. although mexico enjoys strong macroeconomic fundamentals, financial risks should continue to be monitored. continuation of recent upward trends in inflation as well as factors that may generate additional price pressures are risks that must be carefully watched in order to make convergence to the permanent inflation target a reality. current discussions on recovering the real value of the minimum wage underscore the need to keep the upper hand in the fight against inflation. finally, progress on structural reform is encouraging, but implementation over time must be adequate for expected benefits to fully materialize. bis central bankers ’ speeches