were created. economic policy coordination and budgetary surveillance have been reinforced. the new fiscal framework, laid down in the “ fiscal compact ”, came into force in january 2013. member states that have signed up to the compact are required to adopt national fiscal rules to ensure that the annual structural government deficit does not exceed 0. 5 % of gdp, as well as a correction mechanism to be triggered automatically in the event of deviation from either the medium - term objective ( mto ) itself or the adjustment path towards it. at the same time, decisions were taken towards enhancing the institutional framework for financial supervision and safeguarding financial stability. top priority was given to the establishment of a banking union. the approval of the single supervisory mechanism, scheduled to become operational in november 2014, as well as the european council ’ s agreement on a general approach to a single resolution mechanism are important steps towards the completion of the banking union. in 2013, agreement was also reached on directives on deposit guarantee schemes and a framework for the recovery and resolution of credit institutions. as far as greece is concerned, the institutional improvements to the emu architecture will ensure that past mistakes in fiscal management are not repeated and will contribute in the long run to economic stability, while the banking union is expected to boost confidence in the banking system. prerequisites for the materialisation of the forecasted recovery in 2014 based on all the available data, it is reasonable to forecast that 2013 was the last year of recession. however, if this forecast is to become a reality, not only must the conditions contributing to the improved outlook remain unchanged, but they also have to be taken further. the prerequisites for this to happen are : • resolve and consistency in implementing the stabilisation programme. the positive outcomes so far leave no room for complacency. on the contrary, they call for a continuation of fiscal adjustment for maintaining a sustainable and increasing primary surplus so as to ensure debt sustainability and consolidate the climate of confidence. bis central bankers ’ speeches • elimination or at least minimisation of the risks and uncertainties that might be triggered by a deterioration in the social and political climate, as a result of growing confrontation in the run - up to the european and local government elections. today, as we are near the end of a protracted recession, a comprehensive national policy that will lead us safely out of the crisis and onto a path of sustainable growth is required. to be effective, such a policy requires consensus building and compromise.

bankers ’ speeches the capacity for credit expansion will remain limited on account of these factors. this credit squeeze can, however, be offset in the short term by companies turning to alternative sources of funds, such as internal capital generation, corporate bond markets, equity markets, private placements and other modern financing tools, as well as resources available from eu structural funds and the european investment bank. in the medium term, though, the improvement in macroeconomic aggregates will pave the way to a gradual normalisation of credit expansion. policy to speed up the restructuring of the economy and move quickly to sustainable growth the main objective of policy today is the strengthening of the productive capacity of the economy so that the emerging recovery can be the start of sustainable growth in the years ahead. the economy is in a process of transition from a growth model that has exhausted its limits to a new model, capable of ensuring robust, sustainable growth in the future. as the bank of greece has repeatedly stressed, this new growth model must be based on a shift : • from production of non - tradables to production of tradables ; • from consumption to savings and investment. admittedly, while the old growth model was discredited suddenly and violently, the new model has yet to emerge clearly into sight. transformation is, by its very nature, slow and painful, as it entails a shift of capital and human resources across sectors and activities. it presupposes the emergence of new poles of attraction for capital, innovative investment and cutting - edge entrepreneurship. it can be facilitated by a reorientation of the banking system and policies to enhance labour mobility. the restructuring of the economy towards tradables production has already begun, but remains weak, against the backdrop of recession and heightened uncertainty. restructuring can, however, be accelerated if economic policy assigns top priority to generating the necessary conditions conducive to the desired transformation. such a policy objective requires : • well - functioning markets for products, labour and capital. • a business environment in line with best international practices, with a low administrative burden for businesses, an efficient public sector and a stable and favourable tax framework. • a steady commitment to reducing the tax burden, especially on businesses. declining taxation would both increase the incentive to invest and make more funds available for investment. • accelerated implementation of the privatisation programme and strengthening of the legal framework for investor protection to attract foreign investment. • a shift on the part of companies to market - based financing. • the