6 / 17  BIS central bankers' speeches  All in all, the current situation is much improved, but economic reforms in the goods, capital and labour markets which remove barriers to competition and increase market flexibility are essential for the smooth functioning of the Economic and Monetary Union (EMU).
Such reforms are key to raising productivity and employment in the euro area, thereby supporting the growth potential of the euro area in the long run. What is also needed is investment in talent and human resources, on which the European Union is currently lagging behind its major competitors. 1.4 The political landscape: where is Europe headed?