that their economic prospects can be insulated from weak demand in the euro area, should it persist or reappear in the future. let me also add that for eu candidate countries the benefits of eu membership remain as convincing as ever : the acquis is the surest path to modernisation, democracy and the rule of law. but while the benefits of euro membership are real, like any club, the euro area has rights and it also has obligations. and during the crisis, the obligations of membership have become much more clear. first, countries have to be ready and willing to join. by this i mean they must have internalised, in their public debate, the requirements of being part of a monetary union. countries cannot join the euro area but continue with the same economic policies based exclusively on national considerations. and this consensus needs to be there before membership. second, while the treaty prescribes the criteria for joining the euro, convergence means more than meeting a set of nominal criteria at a point in time. it has to involve laying the foundations to prosper in emu over the long - term. there cannot be labour markets that protect insiders ; product markets that shield closed professions ; education systems that hinder innovation ; public administrations that fail to collect tax or pay arrears ; or judicial systems that cannot enforce contracts in reasonable time. countries that join the euro area in the future are in the enviable position of being fully aware of these obligations. they can prepare properly for membership and hence maximise the benefits. and indeed, many are already doing that. it is somewhat ironic that the exemplars for the right kind of policies for euro area membership are mainly found outside it. latvia is the leading example of how to adjust through internal devaluation, and it is a model for others in the euro area. its “ v - shaped ” economic recovery illustrates what can be done with a strong consensus to undo the excesses of the past. after an initial fall in gdp of bis central bankers ’ speeches almost 18 % in 2009, gdp increased by more than 11 % from 2010 to 2012, and unemployment has fallen by almost 7 percentage points from its peak. and poland is a case in point of how not to get into difficulties in the first place : it is a country with relatively sound macroeconomic fundamentals, which has managed to avoid recession and preserve sustainable growth in recent years. to sum up, the case for joining the euro area for cee member states

growth trajectory. our level of crisis preparedness has also been enhanced through various global financial safety nets which have been strengthened since the crisis, between the end of august and end september, the zar depreciated from 10. 66 to 11. 30 against the usd as strong economic data from the us resulted in the market pricing in the possibility of a more aggressive monetary tightening by the fed. bis central bankers ’ speeches not just in terms of the imf toolkit, but also regional financial safety nets, and more recently, the brics treaty on the contingent reserve arrangement, which was signed by the brics countries at the fortaleza summit in july this year. we can also be optimistic about the efforts of the g20 to lift global growth and ensure that this growth is more balanced and sustainable. as you may know, the g20 is committed to developing new measures that aim to lift our collective gdp by more than 2 per cent by 2018 above the trajectory implied by policies in place at the time of the st petersburg summit in 2013. we have been working hard towards this goal during 2014, and have made some headway in developing growth strategies that talk to this ambition. as indicated in the most recent communique in cairns, preliminary analysis by international organisations such as the international monetary fund and the oecd indicates that measures committed to thus far by g20 countries will lift our collective gdp by an additional 1. 8 per cent through to 2018, including from important positive spill overs. we also continue to focus on the need for global rebalancing and appropriate macroeconomic policies as a means to achieve strong, sustainable and balanced growth. we trust that by the time of the leaders ’ summit in november, additional commitments made will lift this number to 2 per cent. structural reforms will be important in lifting growth, reducing unemployment and enhancing trade. these commitments will not just end there, as there will be a process for monitoring and ensuring implementation. conclusion to summarise, it would seem that south african monetary policy will continue to face conflicting challenges, with respect to both the economic growth and the inflation outlook, in the times ahead. a global economic recovery would normally improve the domestic economic outlook and create a more stable backdrop for domestic policy normalization, however, it is at risk from the present lack of sustained economic upswing in regions like the eurozone or japan. rising us policy rates risk complicating the financing of south africa ’ s current account and placing pressure on the