continued quantitative easing in most other advanced economies and the divergent monetary policy in emerging and developing economies. from a medium - to - long term perspective, all these trends could have a positive effect. still, they also have short - term consequences, which pose significant downward risks for the global economy. it is highly likely that the chinese rebalancing will in the short term lead to slower economic growth, which could spill over to other economies via the well known trade, financial and confidence channels. in particular, the early evidence indicates that the chinese slowdown is having stronger than expected effects on lower imports and lower commodity prices. in addition, such downward effects could be magnified by the possible accompanying turbulences in global foreign exchange and other financial markets. second, the falling oil and commodity prices ( and the expected persistence of low prices ) could have negative effects on exports and economic growth in commodity - exporting emerging economies. this could also be reflected in further currency depreciations in these economies, which might in turn magnify corporate balance - sheet weaknesses, thus reinforcing negative growth feedbacks. finally, divergent monetary policy moves between the us and most other economies that contribute to us dollar appreciation may have negative bis central bankers ’ speeches effects, with higher borrowing costs for dollar - denominated borrowing by emerging market companies and sovereigns. geopolitical tensions regarding ukraine and the middle east also imply continuous uncertainty, which increases borrowing costs and makes investment decisions more difficult. related to this, the refugee crisis represents an additional political and systemic challenge in our countries. this applies particularly to fiscal costs and possible political instability arising from refugee accommodation and integration, which might affect macroeconomic policy and wider european political and economic integration projects. given the trade and financial linkages of this region with the european economy, it is of interest to also shed some light on the europe ’ s growth prospects. it is encouraging that the economic recovery is expected to proceed in the monetary union, at a growth rate of slightly below 2 %. it is to be supported by the ecb ’ s monetary policy measures, by the earlier progress made with fiscal consolidation and structural reforms, and low oil prices as well. however, similar to the global outlook, the economic recovery in the euro area is moderate and downside risks prevail. they pertain to the global uncertainties that were mentioned previously, as well as to broader geopolitical risks. it seems that the possibility of prolonged slow growth is high, and

##m 2 mechanism for at least two years and delivering stable currency, inflation and long term interest rates comparable with those in the eu, and disciplined and prudent public finance. all of these are euro convergence criteria that at the end boil down to having safe and sound economy and disciplined monetary and fiscal policy, as a precondition for smooth monetary integration. hence, entering the eu not only will facilitate trade and finance, and make movement of people much easier, but it will also open the doors to gradually move towards a single currency. the benefits of adopting the euro are well known, in particular for a country that already has the exchange rate as a target, which means smoother transition. the single currency eliminates the currency risk and transaction costs, and thus facilities trade of good and services. it can also reduce the costs of financing, enabling easier access to finance and better opportunities for business decisions. the single currency and the participation in the monetary union provides the country with a backstop in case of financial difficulties and disabled access to international markets through the so - called european stability mechanism. of course, adopting the single currency would mean giving up on the monetary policy independence, which is already limited given the exchange rate peg, and would not require major adjustments. this cost is lesser compared to the benefits that the single market and single currency would bring, under the assumptions that all the policies would be in place and prudent enough to secure sound fundaments and stability of the economy. to recap, the eu integration is a process, which will provide boost and will shape reforms in many areas, underpinning the process of real, social and institutional convergence of the country. it will also impact the monetary policy making, both before and after the final stage of complete monetary integration. the challenges for the central bank are of a multidimensional nature – macroeconomic, institutional, and operational. steering the wheel properly would require strong institutional capacity and awareness of all the policy makers that smooth integration requires healthy economy, absence of imbalances and sound policies. thank you. 2 / 2 bis central bankers'speeches