tradable goods and services. but if we are to succeed in transforming the economy, we must realise that the adjustment programme highlights only the minimum changes that need to be made. thus, in no way does the programme relieve us from our primary responsibility as a nation to implement a broader national action plan for growth, incorporating policies for the transition to a new model of sustainable growth. now that public finances are stabilising, it is essential that we proceed faster with fundamental reforms that will ensure : • an efficient public sector, both citizen - and business - friendly ; • modern infrastructure ; and • open, competitive markets. effective use of eu funds following the recent european council decision, the structural funds available to greece for 2014 – 2020 will total eur 18. 3 billion. these resources can play a decisive role in bringing the recovery forward and in implementing a long - term strategy for the transformation of the economy ’ s productive base. under current circumstances, eu resources could help to address serious gaps in the financing of new investment projects. so far, eu funds, despite their positive contribution, have not been used to maximum advantage. this is precisely why such resources will function at this time as powerful tools for growth, provided they are integrated into a broader national plan for growth. creating the conditions for lightening the tax burden of those who already pay taxes the central goals of the tax reform agenda should be to broaden the tax base and curb tax evasion. indeed, fiscal adjustment should focus, first, on cutting down those expenditure items that are not conducive to growth and increasing the return on other items of expenditure and, second, on modernising tax administration in order to effectively tackle tax evasion. action along these lines will create scope for reducing the heavy tax burden that has, increasingly in the last few years, been shouldered by those who already pay taxes. this will help foster a sense of equity in tax matters and will generate positive expectations that will partly offset the contractionary impact of spending cuts. the reform of the banking sector is key to restoring normal liquidity conditions since the onset of the crisis, greek banks have borne the brunt of the repeated downgrades of greek sovereign debt. they were cut off from international markets, while the prevailing uncertainty led to large deposit outflows and a loss of more than one third of the banks ’ deposit base in less than three years. the banking system ’ s funding constraints impaired its capacity to finance the real economy, causing problems for production

flexible and market - oriented. fourth, significant steps have been taken to improve economic policy coordination. these measures included the strengthening of the stability and growth pact, the establishment of the european semester, stronger emphasis on macroeconomic imbalances and the fiscal compact. last but not least, crucial steps have been agreed to move towards the creation of a banking union. the single supervisory mechanism will start operating in november 2014 and agreement on the single resolution mechanism has been reached. these measures will bis central bankers ’ speeches work to reinforce the european banking system, reduce the negative feedback loops between banks and sovereigns and overcome fragmentation in eu financial markets, promoting growth. results and challenges ahead the european strategy to deal with the crisis is delivering results, as interest rate differences between core and periphery countries have been reduced, programme countries have regained market access and the banking sector has been strengthened. however, many challenges remain. a key characteristic of the euro area economic recovery is the continuing decline in loans to the private sector. the recovery is so far “ creditless ” at both the euro area as a whole and, in many cases, in individual countries. because the euro area economy is bank - based, bank lending is especially significant for companies and, in particular, for smes, which produce the bulk of goods and services and account for a large share of employment. consequently, the on - going credit contraction raises the question : can the recovery be sustained in the presence of negative loan growth? personally, i doubt it. looking ahead, there is a need to deal with limited potential growth in the euro area. to this end, euro area members are increasingly recognizing the need for joint efforts and coordinating national structural policies for growth and jobs, as reflected in the recent conclusions of the european council. today ’ s speaker klaus regling, as the first managing director of the european stability mechanism and chief executive officer of the european financial stability fund, has been at the centre of the euro area crisis. his career has spanned 35 years in senior positions mainly in the public sector. he worked at the imf in washington and jakarta ; he spent around 10 years at the german ministry of finance, working on preparations for monetary union ; he then moved to the european commission where he was director general for economic and financial affairs from 2001 to 2008. he is thus perfectly suited to address the issue of how we overcome the euro area crisis. bis central bankers ’ speeches