were also a consequence of dynamic export growth and not just resulting from import compression due to the recessionary period. 6 / 16 bis central bankers'speeches slide 6 the impressive correction of current account deficits in some euro area countries has been mirrored in a significant adjustment of intra - euro area trade and current account imbalances ( see slide 7 ). as a result, some euro area countries with large external surpluses now record current account surpluses mostly vis - a - vis countries outside the euro area. 7 / 16 bis central bankers'speeches slide 7 fiscal deficits have been reduced. fiscal effort, measured as the change in the structural primary balance, has been significant in many countries ( see slide 8, chart on the left ). as a result, and also thanks to the reduction in interest payments, fiscal deficits are now in almost all countries below 3 % of gdp ( see slide 8, chart on the right ). 8 / 16 bis central bankers'speeches slide 8 beyond fiscal deficits, the level of public and private debt has also posed concerns in some countries. in the run - up to the crisis, it was not so much public debt but rather the private sector indebtedness that increased substantially ( see slide 9 ). this should be underlined because, as jorda, schularik and taylor ( 2016 ) said : “ … private credit booms, not public borrowing or the level of public debt, tend to be the main precursors of financial instability in industrial countries. ” 2 it was only after the crisis that public debt increased, on account of the necessary interventions. more recently, both public and private sector debt levels stabilised, thanks to consolidation efforts and private sector deleveraging, even if remaining rather diverse across countries. focusing on the programme and post programme countries, private debt levels in percent of gdp are currently lower than 10 years ago in spain, portugal and greece, but still higher in cyprus and ireland. public debt however is higher than at the start of the crisis, across the euro area. increasing the growth potential of euro area economies would help to achieve a downward shift in the debt - to - gdp ratios. 9 / 16 bis central bankers'speeches slide 9 synchronisation of economic cycles and symmetric shocks an important aspect stemming from the theory of optimal currency areas, relates to the risk of asymmetric shocks to countries in a monetary union, placing them in different phases of the economic cycle, which would make a single monetary

- owned enterprises. this, however, was still not enough. the vulnerability of the maltese economy was exposed in 2001 by the mounting competitive pressures from emerging economies and by two major external shocks, the bursting of the dot. com bubble and the events of 9 / 11, which together had an adverse impact on the manufacturing and tourism sectors. by the time malta was about to join the eu, the economy was emerging from a period of stagnation, with a widening output gap, a slow pace of productivity growth and a large current account deficit. in addition, while the government planned to reduce the budget deficit from almost 10 % of gdp in 2003 to below 3 % by 2006, an adjustment of that regional economic integration : the options for malta, speech delivered at the annual dinner of the malta institute of financial services on 7 november 2002. magnitude clearly presented considerable risks, not least because some fiscal tightening was already under way. the unemployment rate, for example, was edging upwards, partly in response to the ongoing restructuring process and the further liberalization of markets ahead of eu accession. in these circumstances it soon became evident that the advantages of the single market needed to be complemented by those of monetary union. the central bank of malta was an early advocate of this objective, particularly because of the greater stability and policy credibility that it promised. from the bank ’ s perspective a key advantage was the elimination of the risks inherent in managing a small, vulnerable currency. the irrevocable fixing of the exchange rate and the macroeconomic policy discipline of emu, moreover, promised to offer a congenial environment for implementing the structural changes necessary for a lasting improvement in the country ’ s international competitiveness. this belief was shared by the government and the rest is history. in 2005 the decision was taken to join erm ii with a unilateral commitment to maintain the exchange rate at its central parity. this was supported by a process of fiscal consolidation, driven both by revenue enhancing and expenditure cutting measures ; the first stage of pension reform ; the liquidation of loss - making state enterprises and the privatization of others ; and further liberalization measures, including in telecommunications and the postal and port services. measures were also taken in pursuit of the lisbon agenda objectives, especially to improve labour market participation and to enhance educational attainment levels. finally, eu accession also saw the adoption of a new framework for product market regulation. the decision to meet the maastricht criteria at the earliest possible opportunity seemed overly ambitious