met. currently, virtually all new member states outside the euro zone lack a euro adoption target date, which is indicative of a substantial shift in approaching the euro changeover as a whole rather than their inability or difficulty to comply with the reference values of nominal convergence. how did this change come about? this shift in approach occurred amid euro adoption benefits becoming less obvious, to which added the increasingly evident costs. this is also reflected by the flash eurobarometer, which indicates a significant decline in the number of those who believe that adopting the euro is beneficial for their country. figures differ across countries – with the lowest numbers in the czech republic ( around 20 percent ) and the highest in romania ( above 50 percent ) – but the tendency is the same. referring to the benefits of euro adoption, one of the prominent ones, namely the lower financing costs, is no longer obvious. the incomplete institutional setup of the european project in general and the european monetary union in particular – weak fiscal rules and the lack of any transnational instruments that would have enabled monitoring cross - border private capital flows – gave rise to a number of vulnerabilities which the recent crisis has exposed. to be more specific, what sets the european union apart from the other industrialized economies is precisely the fact that the initial banking crisis which hit everybody here gave birth to fears of sovereign default, which reinforced banking system vulnerability and sapped investor confidence further, thus deepening the recession. the consequence of all that was the financial fragmentation issue, which is precisely the reason why the lower financing cost benefit of euro adoption, seems to have vanished. another unfortunate consequence was that the benefits brought about by commercial integration were significantly diminished by lack of growth in the euro area. the fixes proposed to the institutional architecture of the european monetary union, such as the setup of the european stability mechanism and even that of the banking union, brought bis central bankers ’ speeches about direct costs of adopting the euro. the issue here is not only the financial effort involved, but also the difficulty, from a political perspective, to explain to the public the need for a financial contribution to mechanisms benefiting wealthier countries for the time being. a case in point is the fall of the radicova cabinet in slovakia in 2011. euro adoption – a conclusion in my view, euro adoption is in the best interest of eu member states in the long run – given the high degree of business cycle correlation and market integration –, but several essential preconditions, added to the nominal

mugur isarescu : relations between euro and non - euro countries within the banking union speech by mr mugur isarescu, governor of the national bank of romania, before the unicredit 15th international advisory board, rome, 10 july 2014. * * * ladies and gentlemen, let me first thank unicredit and mr. romano prodi for inviting me to make this address in front of such a distinguished audience. i was asked to talk about the soon - to - be - operational banking union, specifically about the relations between the euro area and non - euro area members and, generally, its anticipated impact on investor confidence across the european union. as you probably know, in my capacity as governor of the national bank of romania, i have argued in favour of the banking union project. i see the banking union as a substitute for the fiscal counterpart of the monetary union required for the proper functioning of the latter. it is hardly imaginable that a consensus on fiscal union is achievable, particularly in today ’ s europe, where both payers and recipients are known beforehand. consequently, to target first the banking union has the distinct advantage of actually being feasible. in this context, i am in favour of romania ’ s entering the banking union before joining the euro area through the close cooperation arrangement with european central bank. my speech will endeavour to outline the arguments that support the opt - in decision for romania, but i believe that, despite the slightly different circumstances, the reasoning also holds true for other non - euro area countries – such as poland, hungary, the czech republic or bulgaria. general remarks before dealing with the arguments underpinning our position regarding the banking union, let me give you a short account of romania ’ s recent economic history that should enable all of you to better understand our particular circumstances. no doubt the crisis has taken its toll on romania ’ s economy, given the large imbalances which had been steadily accumulating during the boom years. whether the crisis has ended or not on the european level is still a matter of debate. what may be said for certain is that romania undertook the necessary adjustments during the 2009 – 2012 period and the preconditions for sustainable growth are now in place. indeed, the outcome of these adjustments may already be seen in the 2013 economic performance, which hopefully marks a turnaround in romania ’ s economic development : • rapid ( judged by the current standards in the european union ) economic growth, namely 3.