policy stance, especially if sustained over a prolonged period of time, can effectively be countered by targeted micro - and macroprudential measures. conversely, situations that require a tighter monetary policy stance, but for which a more nuanced effect on the real economy is desired, may call for a simultaneous relaxation of prudential measures that perk up economic activity via easier lending conditions, provided the health and stability of the financial system remain within safe margins. 8 lastly, although generally operating over a longer - term horizon, structural reform should also be a strategic part of policy coordination in emerging market economies. by providing incentives to improve the overall functioning of domestic input and product markets, increasing their competitiveness and strengthening the institutions within which they operate, policies that overhaul structural aspects of the economy foster efficiency gains that increase its productive potential. thus, a successful implementation of structural reform can ultimately result in strengthened buffers in other areas of policy as, for instance, an expanding productive capacity may offset the potentially adverse impact of restrictive fiscal and monetary policies on economic activity ; increased competition and efficiency resulting from structural reform alleviate inflationary pressures ; and possibly higher fiscal revenues in a context of faster economic growth, both see garcia - cicco, javier, markus kirchner, julio carrillo, diego rodriguez, fernando perez, rocio gondo, carlos montoro and roberto chang ( 2017 ) : “ financial and real shocks and the effectiveness of monetary and macroprudential policies in latin american countries ”, bis working paper no. 668, october. actual and potential, reduce the level of public debt relative to the economy ’ s gdp. naturally, the implementation of structural adjustment policies faces a number of challenges and some resistance is likely to arise, mostly as a result of the redistributive effects, both across time and across sectors, inherently imbedded in them. thus, it will frequently be important to place actions in this realm within the context of a broader - ranging plan that contemplates countering, and coordinated, measures in other fronts. for instance, fiscal and monetary easing may reduce the short - term output costs associated to the economy ’ s process of adjustment in the aftermath of structural reform, while the enhancement of the social safety net and the enactment of other targeted programs may alleviate the costs of transition. let me turn now to mexico ’ s experience regarding the role of policy efforts in the above - mentioned areas in overcoming the macroeconomic challenges faced in recent years. inflationary pressures in

in the market are dealing with a wider range of counterparties, and actually trade larger unit amounts. some bank treasurers in paris mention that the average face value in euro of single transaction today is equivalent to the face value of a transaction in french franc in 1998, that is, more than six times higher. • second, financial market integration is related to the trend towards the greater share of markets in the allocation of assets. at the end of 2000 financial assets in the euro area were dow jones is 70 % over the period january 1999 - october 2002 ( 70 % when the measure is based on sp500 ), and 100 % between cac and eurostoxx50 ( 97 % between dax and eurostoxx 50 ). split almost equally between intermediated and non - intermediated assets. although credit still plays a prominent role in the allocation of financial resources, credit institutions themselves are relying on the financial markets to manage their balance sheets. these two points suggest that the benefits of enhanced liquidity entail the management of a new range of risks. this should not lead us to conclude that financial integration has necessarily negative side effects from the point of view of financial stability. financial integration may help to foster financial instability. i would like to put forward three reasons for this : • first, the setting up of a large currency area eliminates disruptions arising from currency risk that would otherwise prevail between the participating countries. domestic economies are immune to currency misalignment episodes that disturb regional trade. currency risk premia are eliminated from interest rates. • secondly, the setting up of a large currency area implies an overhaul of market infrastructure. in this respect both public bodies, such as national central banks and market participants, have a unique opportunity to pool best practices. indeed, this has been the case in the euro area where, for example – the target system, interlinking domestic real - time gross settlement systems, has demonstrated its ability to absorb large volumes of cross - border flows, and to perform well even in critical circumstances such as september 2001. the target system processes today around eur 1500 billion per day, 50 % more than the average in 1999 and an estimated three times the amount that all the large - value payment systems in the 12 euro area countries processed together in 1990. • thirdly, a large currency area means deeper and more liquid financial markets. this allows market participants to diversify their risks on a wider basis ; moreover, as currency risk is eliminated, they can focus