##ing upward pressures on inflation. 2. co - operation between the central bank of malta and the ecb the ecb has very much appreciated the fruitful cooperation with the central bank of malta in the preparations for malta ’ s entry in the euro area, be it at the technical level or through the i should like to thank fabrice orlandi and olivier radelet for their input into this speech, as well as martin bijsterbosch, hans - joachim klockers and nick vidalis for their helpful comments. participation of governor bonello in the general council since may 2004, and more recently, as an observer in the governing council since last july. practical preparations of the cash changeover were remarkably well organised and the euro campaign organised by the maltese authorities has very well prepared the maltese population to allow a smooth changeover. 3. how to ensure the sustainability of convergence once the euro has been adopted for the proper functioning of the single monetary policy in the euro area all participating countries are required to exhibit a high degree of convergence and, importantly, to do this on a sustainable basis. for all enlargement decisions for the euro area, we refer to clearly defined convergence criteria and apply them in a strict manner. sustainability is key in this respect. once the euro is adopted, there is no return. sustainability has been key in our past convergence assessments and will remain so in the future. the entry of malta in the euro area implies that the benefits of the single market will be further enhanced by the single currency. the euro offers a credible framework for price stability in an environment characterised by the absence of exchange rate uncertainty within the euro area. malta will also benefit from the stability oriented policy of the ecb, which will help anchor inflation expectations. furthermore, as malta is a small open economy, adopting the euro provides protection against international financial disturbances, which often have a disproportional effect on smaller economies. i should underline, however, that these benefits do not come automatically. they depend to an important degree on the economic policies pursued by euro area countries themselves. for malta, it is particularly important to continue on a sustainable and credible path of fiscal consolidation and to improve its fiscal performance by tangibly reducing its high debt ratio. it will be important, in both the public and the private sector, to maintain moderate labour costs developments that take into account labour productivity growth, labour market conditions and developments in competitor countries. it is particularly crucial for the competitiveness of the maltese

mario draghi : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, before the hearing at the committee on economic and monetary affairs of the european parliament, brussels, 15 february 2016. * * * mr chairman, honourable members of the economic and monetary affairs committee, ladies and gentlemen, the first weeks of this year have shown that the euro area and the union at large face significant challenges. a strong effort by all policy makers will be needed in the months ahead to overcome them. i am therefore grateful to be back before your committee to discuss these challenges and how the ecb can contribute to tackling them. in my remarks today, i will address in turn the global economic context, recent financial developments and the state of the euro area recovery. i will conclude by briefly presenting our most recent decision to disclose the agreement on net financial assets – or anfa – as i know this topic is of concern to some of you. the state of the global economy let me start with the state of the global economy. in recent weeks, we have witnessed increasing concerns about the prospects for the global economy. activity and trade data have been weaker than expected, turbulence in financial markets has intensified and commodity prices have declined further. slowing growth in emerging market economies is a focal point for this uncertainty. in the early years of this century, many emerging economies expanded at a rapid pace. they benefited from increasing integration with the global economy and the tailwinds of buoyant financial markets. as these factors diminish, many countries have to adjust to a new reality. in several economies the slowdown has revealed and exacerbated structural problems which are increasingly restraining growth. a continuation of the rebalancing process is needed to secure sustainable growth over the medium term. this could imply some headwinds in the short term, which will require close monitoring of the related risks. one consequence of this adjustment is the divergence of economic cycles. while the recovery in advanced economies is gradually proceeding, the growth momentum in emerging market economies has weakened. weaker global demand has also contributed to the recent fall in the price of oil and other commodities, which in turn may have aggravated fiscal and financial fragilities in some commodity - exporting economies. countries that have suffered worsening terms of trade have seen a sharp decline in activity, while investment in their energy sectors has contracted. recent financial developments since early december, a general deterioration in