the full benefits from euro introduction. in addition, it should be clear to everyone that also for the euro area it is crucial that the institutional roadmap for euro adoption is fully respected. a loosening of the institutional framework could imply considerable losses in the credibility of the overall foundations on which the monetary union is built. the achievement of the sustainable convergence of all its member countries is therefore key for the coherence of the euro area and the efficient functioning of the single monetary policy. i mention all this to make the point that the fundamental logic of the treaty remains correct : countries have to make sure that they pursue sound macroeconomic policies. they should first and foremost focus on ensuring sound fiscal and sustainable macroeconomic developments in their own country and complement this with the necessary structural reforms. and by doing so, they will actually kill two birds with one stone, as they then also follow the best possible strategy for ensuring a smooth integration into the euro area in a lasting manner. one may wonder why the catching - up process of some current emu members was smoother than that of many central and eastern european member states. similarly to the new member states, some current euro area countries started their accession to the eu from relatively low initial per capita income levels. nevertheless, a number of these countries went through a more gradual convergence process spread over a longer period, allowing their economies to gradually adjust to the conditions prevailing in the single market before they entered emu. the experience of some current euro area countries also shows that euro adoption per se does not solve home - made problems and that important challenges will persist also after euro adoption. in several countries in the euro area, inflation remained persistently above the euro area average following euro adoption. not surprisingly, cost competitiveness in these countries eroded, leading to widening external imbalances. these imbalances built up despite very different developments in economic activity. any accumulated losses in competitiveness will have to be unwound eventually. for a country belonging to the euro area this implies periods of below average unit labour cost growth. without sufficient flexibility in wages this may imply drawn - out and costly adjustment periods. the experience of current euro area countries shows that there have been persistent differences across some countries after the adoption of the euro in terms of inflation, unit labour costs and external imbalances. these differences have in part been due to excessive fiscal deficits or to bubbles which developed in domestic housing markets. partly they are also due to a lack of responsiveness of prices and

held on the eurosystem balance sheet into the market — likely into repos or short - term government securities. this, in turn, could have created additional demand for highly - rated euro collateral, at a time when some segments of money markets, in particular the market for euro area repo and short - term government securities, are showing signs of collateral scarcity ( chart 2 ). the early indications are that the decision on the remuneration of government deposits has been effective. following the announcement of the change in the remuneration of non - monetary policy deposits, the recent increase in the spread between the yield for short - term euro government securities and interest rate swaps has been partially reversed. ( chart 3 ). at the same time, as the change in the ceiling for the remuneration of governments will only come into effect today, the full effects of the measure may only become visible over time, and we remain attentive to the spread between different money market rates as well as collateral scarcity concerns. the temporary change in the remuneration ceiling for government deposits gives government deposit holders extra time to undertake a smooth and gradual return of their deposits to the market. from the ecb ’ s perspective, it remains the case that encouraging market intermediation of these deposits remains desirable in the long term. in the meantime, the temporary change will allow us to assess the adjustments of money markets across market segments to the return to positive interest rates and thereby also reduce uncertainty about the pass - through of the changes in the ecb interest rates to money markets. chart 3 change in 3 - month bill to ois spread de and fr ( left side ) ; change in 2 - year bond to ois spread de and fr ( right side ) ( percentage ) sources : bloomberg and ecb calculations. notes : the charts display the change in 3 - month bill to overnight indexed swap ( ois ) spread and 2 - year bond to ois spread for germany and france between the july and september governing council meetings ( blue bar ) and the change since the september governing council meeting ( yellow bar ). the latest observations are for 13 september 2022. 1. i am grateful to pamina karl for her contribution to this speech. 2. for more general considerations on this new phase of euro area monetary policy, see also lane, p. r. ( 2022 ), “ monetary policy in the euro area : the next phase ”, remarks to the policy panel at the annual