This is what a responsible government ought to do:  2  BIS central bankers’ speeches  •  to state that the adjustment is for the country’s own good, and not just to please international lenders;  •  to tell the hard truth;  •  to explain what needs to be done;  •  to be clear what the consequences of non-action or of alternative policy choices would be. All this is conducive to public acceptance of the programme and, therefore, its success. And this is also in the enlightened self-interest of the government, as the electoral reward of the Latvian Prime Minister demonstrates. Beyond economic considerations, the adjustment programme has to be put into a broader context. Political factors can also be key justifications for undertaking difficult economic measures. In the case of the Baltics, the ultimate objective of adopting the euro also has a geostrategic dimension, namely completing their firm anchoring in a Union based on freedom, democracy and human rights. In fact, sharing a currency is more than just drawing economic benefits; it means being part of a community with a shared destiny. This project of political integration justifies making short-term sacrifices to join – or stay within – the euro area. To sum up, a speedy fiscal adjustment, a critical mass of structural reforms and a strong national ownership: these were, in my view, the key ingredients of the Baltic recipe for a quick economic rebound.
But let me state very clearly that the euro area is not a closed club. It is open to any EU Member State that fulfils the convergence criteria on a sustainable basis. IV. Conclusion  The Baltic experience demonstrates that euro membership is not just about economics. The economics alone make only for a partial analysis of the failure or success of an adjustment  BIS central bankers’ speeches  3  programme. The political motivations – such as the determination to join the euro area or to safeguard the political capital invested in EMU – have often been underestimated by markets during the crisis. I firmly believe that both economic and political arguments will ultimately also prevail in countries currently in the middle of an adjustment process that is similarly painful to Latvia’s experience. Thank you very much for your attention. 4  BIS central bankers’ speeches