BIS central bankers’ speeches  3  Chart 4  Borrowing rates for debt-burdened countries have fallen markedly. Other risk premiums have also decreased. Fears of a euro-area breakup and the collapse of the European economy no longer seem dominant. The European monetary union – after being established – cannot be dissolved without serious consequences for Europe and the world economy. There is little point in discussing whether the original idea was a good one or not. The child was born and is now a teenager. As expected, puberty has presented problems. These problems must now be dealt with by the European authorities. Budget deficits in Europe are being reduced, despite strong headwinds from the slowdown that follows in the footsteps of austerity. Structural reforms are being implemented to increase growth capacity over time. Business sector costs are falling and competitiveness is improving in the countries hardest hit by the crisis. Steps have been taken in the direction of closer cooperation and coordination of economic policy. However, the path ahead is long. We may have to wait until the next decade before growth gains a firm footing in Europe. Nonetheless, we have seen a clear shift in financial market sentiment. This shift is reflected in the fall in European government bond yields. The clearest indication of optimism can be found in equity markets. 4  BIS central bankers’ speeches  Chart 5  With the upswing in equity markets, the value of Norway’s financial wealth is increasing.
The BNB Governor also outlined the second work block in this direction, on which the BNB is currently working, i.e., the overall framework of determining the amount of funds to be contributed by banks to the Single Resolution Fund and the amount and way of transferring funds from the Bank Resolution Fund in Bulgaria, which was set up in 2015, to the Single Resolution Fund. The third work block covers the overall activity of planning and conducting resolution activities, including the distribution of responsibilities and tasks between the Single Resolution Board and the BNB after our country joins the Banking Union. With regard to the expected effects on the economy and the business, the BNB Governor highlighted that it was positive to reaffirm Bulgaria’s strategic course, and that the process is already being filled with content and specific timeframe. The whole process stands as a positive counterbalance against the more general uncertainty from the global and European economic environment. 1/2  BIS central bankers' speeches  Among the more direct positive effects from this first stage on the path to the euro area is the anticipated improvement of the country’s credit rating, as announced by the credit agencies, should the process run successfully in the short-term. That would improve the funding conditions in the country. At the same time, the effects of joining ERM II will not be tangible in regard to the macroeconomic policy and neither will our monetary regime change.