purchase ; the amount for 2007 is $ 417, 000. jumbo loans are thus a type of " nonconforming " loan. prime loans are those made to borrowers with good credit records. issuance of speculative - grade bonds dropped off sharply as risk spreads widened. and although equity prices have moved up on balance since late spring, swings in prices have been large ; indeed, the expected stock - price volatilities implicit in options prices roughly doubled during the summer before falling back more recently. as the strains in financial markets intensified, many of the largest banks became concerned about the possibility that they might face large draws on their liquidity and difficult - to - forecast expansions of their balance sheets. they recognized that they might have to provide backup funding to programs that were no longer able to issue abcp. moreover, in the absence of an active syndication market for the leveraged loans they had committed to underwrite and without a well - functioning securitization market for the nonconforming mortgages they had issued, many large banks might be forced to hold those assets on their books rather than sell them to investors as planned. in these circumstances of heightened volatility and diminished market functioning, banks also became more concerned about the possible risk exposures of their counterparties and other potential contingent liabilities. these concerns prompted banks to become protective of their liquidity and balance sheet capacity and thus to become markedly less willing to provide funding to others, including other banks. as a result, both overnight and term interbank funding markets came under considerable pressure. interbank lending rates rose notably, and the liquidity in these markets diminished. a number of the u. s. abcp programs that had difficulty rolling over paper were sponsored by or had backup funding arrangements with european banks. as a result, some of these banks faced potentially large needs for dollar funding, and their efforts to manage their liquidity likely contributed to the pressures in global money and foreign exchange swap markets. the u. s. subprime mortgage market is small relative to the enormous scale of global financial markets. so why was the impact of subprime developments on the markets apparently so large? to some extent, the outsized effects of the subprime mortgage problems on financial markets may have reflected broader concerns that problems in the u. s. housing market might restrain overall economic growth. but the developments in subprime were perhaps more a trigger than a fundamental cause of the financial turmoil. the episode led

2012 period and the preconditions for sustainable growth are now in place. indeed, the result of these adjustments may already be seen in the 2013 economic performance, which hopefully marks a turnaround in romania ’ s economic development : rapid economic growth ( judged by the current eu standards ), sizeable adjustment in the current account deficit, historically low inflation, while keeping the fiscal deficit well below 3 %. as a result, romania is now fulfilling three out of the four maastricht criteria, namely the sustainability of the fiscal position, convergence of long - term interest rates and exchange rate stability ( although we are not technically in erm ii ). meeting the price stability criterion is probably just a matter of months, until the recent low inflation numbers feed into the 12 - month average rate used as a reference. this is especially relevant now in the context of the recent political consensus that romania should aim at adopting the euro by 2019. however, the recent economic european developments have taught us that only the fulfilment of nominal convergence criteria is not enough. the key is to pull this off consistently. setting a target date for euro adoption should act as a catalyst for sound bis central bankers ’ speeches economic policies. romania has a five year period in which to check whether the abovementioned achievements are here to stay and to demonstrate significant progress in real convergence area, where we still have a lot of catching - up to do. another lesson of the recent crisis is that a monetary union cannot function properly in the absence of a fiscal counterpart. in today ’ s europe, it is hardly imaginable that a consensus on the latter is rapidly achievable. the closest substitute – which is supposed to break the vicious circle between sovereigns and banks – is the banking union. romania is a supporter of this initiative as adhering to the banking union will strengthen financial stability and further increase confidence in the national banking sector through the harmonisation of supervisory practices and deposit guarantee schemes and avoiding regulatory arbitrage. in the long run, banking union will foster sustainable lending and economic growth ( by reducing the fragmentation of the european financial markets ). in the particular case of romania, it makes even more sense to support the project given the share of foreign capital in our banking system. furthermore, it is always preferable to have a voice in the setup of a mechanism the existence of which will affect all eu member states, especially since – irrespective of their current choice – all will eventually end up as