uncoordinated we were. not only did this episode affect our credibility, it also revealed the economic costs of non - coordination in terms of prevention and management of crises, both at the national and collective level. at the national level, member states have been lacking the capacity to mitigate large shocks in the emu context. the non - binding nature of economic policy coordination, as set out in the lisbon strategy or the agenda 2020, is partly to blame. some member states also proved to be poorly committed to implementing domestic structural and fiscal reforms that would have created more policy space to address shocks. collectively, the expected dynamics between peer pressure and market discipline did not work, as markets did not believe in the no - bail - out principle, and as national authorities did not really accept peer pressure, nor the implementation of the rules. the absence of coordination has a genuine economic cost. several studies have estimated it for the ea. it includes a ) the cost of crises and assistance programmes, as well as b ) the impact on growth due to uneven compliance with budgetary rules before the crisis and rigidity of the rules during the crisis. let me mention a few numbers. banking and fiscal crises can be extremely costly : relative to the u. s. growth trajectory, the ea has fallen behind bis central bankers ’ speeches by 5 percent of gdp per capita since 2011. both the european commission 6 and the niesr 7 have shown the large impact of simultaneous fiscal consolidation in europe, with around 2 % larger gdp declines due to intra - ea spillovers. optimal policy coordination in the ea would have required differentiated consolidation efforts in line with available fiscal space, leading to better growth outcomes. a last illustration relates to asymmetric adjustment driven by current account imbalances at the country level at the beginning of the crisis and contributing to the large external surplus at the euro area level today. a surplus of more than 3 % of gdp, for an economic area which still has a negative output gap of more than 2 %, is clearly suboptimal. in sum, all these figures point to a significant cost of non - coordination, of at least 2 % of the ea gdp at present. c. to take the debate forward, three principled choices have to be made. these principled choices are needed : ( i ) to resolve the debate between coordination and reforms ; ( ii ) to simplify rules and embrace institution - based policymaking ; in order ( iii ) to achieve full coordination.

is another illustration of the importance of the terms of trade for economies focused on commodities. after experiencing exceptional growth over the last three years, partly driven by the good performance of cocoa prices, contrary to that of other commodities, activity appears to have slowed down, in the wake of the downturn in prices. the subject is also of major importance for central banks because the challenge here is to find how to implement appropriate counter - cyclical policies in the face of large - scale shocks that monetary policy cannot deal with either on its own or in the long run. in this spirit, i would like to share with you this morning some thoughts on two issues : how important are the terms of trade cycles for the economic and financial situation of the exporting poor countries and their neighbours? and how to mitigate shocks? 1 / 3 bis central bankers'speeches 1. how important are terms of trade shocks for poor and vulnerable countries? to illustrate my point, i will take the example of sub - saharan africa. the super cycle of commodity price growth has coincided with over a decade of strong economic growth in subsaharan africa. the degree of causality between these two developments is the subject of debate. before the cyclical downturn, a large majority of observers emphasised the endogenous nature of african growth and minimised, or even denied, the role of the terms of trade appreciation. however, the current terms of trade shock has led to a reversal of the perception of the african outlook. for oil - exporting countries, the twofold decline in prices between mid - 2014 and early 2016 resulted in large budget and external deficits, calling for a rapid adjustment, due to the weakness or lack of countercyclical leeway. the savings accumulated during the upswing in oil prices proved largely insufficient and the borrowing capacity of the countries concerned remains very limited, although some benefited from debt cancellations under the heavily indebted poor countries initiative. in poor and vulnerable countries where financial development is weak and sovereign indebtedness with the banking sector is predominant, the feedback effects between the deterioration in public accounts and rising debt, on the one hand, and liquidity, or even solvency of the banking system on the other, also foster the propagation and amplification of shocks. the current terms of trade shock thus highlights the excessive dependence of vulnerable and poor countries on commodities. 2. how to mitigate terms of trade shocks? on this subject, it seems essential to distinguish two types