of the economy. had this collapse not been averted, losses would have been much greater. an exit from the euro area, as i had put in an interview, would have opened the gates of hell. bis central bankers ’ speeches 2. policy orientations to overcome the crisis against today ’ s more favourable background for the country, recovery appears to be ante portas. the year 2014 marks a halt to a deep and protracted recession. of course, the economy ’ s adjustment has not been completed. but as the first, difficult cycle seems to be coming to a positive end, it would be helpful to evaluate actions and omissions and, most importantly, draw lessons for the future. the bank ’ s positions concerning the exit from the crisis have been expressed based on a number of policy orientations, reflected in its publications and described in detail in the chronicle. these policy orientations can be summarised as follows : first, greece should make every effort to remain in the euro area and steer clear of default, which would have incalculable economic and social consequences. second, the adjustment programme and the agreements with our partners ensure the financing of the greek economy. without them, default would have been inevitable. this is why they must be implemented consistently. moreover, to a very large extent the programme ’ s terms relate to changes that should have been implemented long ago. third, in order to return to growth, securing its european perspective, the country should eliminate its fiscal imbalances, improve its competitiveness and enhance the export orientation of its economy, modernise the state, restore competitive conditions in markets and reduce the burden of public debt. greece also needs a new, outward - oriented growth model. fourth, fiscal adjustment should rely primarily on a rationalisation of expenditure. revenue must be increased by reducing tax evasion and broadening the tax base to make possible the necessary lowering of tax rates and the tax burden in the future. fifth, the historical challenge that the country is facing necessitates the greatest possible alignment of political and social forces, an understanding at the national level and the widest possible convergence of views. finally, the adjustment programmes are a necessary but not sufficient condition for exiting the crisis. a radical reorientation of the economy towards a new model requires a comprehensive national plan for growth, which will have far - reaching goals and will be implemented consistently. adhering to these policy orientations, the bank of greece has performed its institutional functions, informed

nicholas c garganas : the single monetary policy and the analytics of ocas – what has the euro area experience taught us? speech by mr nicholas c garganas, governor of the bank of greece, at a public lecture, athens, 30 april 2008. * * * it gives me great pleasure to be here today to give this public lecture on the european experience with monetary union. the fact that the lecture is taking place at my αlma μater makes this occasion a particularly special one for me, and i am grateful to howard davis and kevin featherstone for extending me the invitation. i hope that what i have to say will provide some food for thought. indeed, i am hopeful that i may be able to convince some sceptics in the audience – and i know that they are out there – that monetary union among european countries can and does work! the adoption of the euro by 11 eu countries in 1999 was a remarkable achievement. it represented the culmination of a process of integration and convergence that had begun some 50 years earlier. the creation of the euro could be viewed as the end of a process, with europe having finally reached full economic and monetary integration. such a view, however, would, at best, be incomplete. although the introduction of the euro marked the culmination of a long process, it also marked the beginning of another one. in particular, it created new challenges for economic policy. i will focus on these challenges in what follows. a natural starting point for analysis of the benefits and costs of a monetary union is the theory of optimum currency areas, originated by robert mundell in the early 1960s, and an important reason for his nobel prize in economics. this literature on optimum currency areas identifies two main costs of a country ’ s participation in a monetary union. these costs are the loss of an independent monetary policy and the ability to alter the nominal exchange rate in order to mitigate the effects of asymmetric shocks. the theory also identifies the desirable characteristics that potential members of a single currency area should have in order to minimise these costs. the characteristics are sometimes viewed as preconditions for judging whether a nation should join a currency union. i will argue that this traditional way of thinking about judging optimality is incomplete. underlying my argument are the following two factors. • first, the traditional approach has to be modified to take modern developments in monetary theory and policy into account. in a world in which monetary policy is best suited