Real convergence is occurring between various parts of the zone and I think this process will continue and support growth in the future, contrary to over simplistic descriptions. One overlooked fact is the very fast productivity catch up in the periphery of the euro area. Between 2000 and 2008, cumulative labor productivity growth in Greece, as measured by the output per employee, was 14,7%, and 10,2% in Ireland. Both significantly outpaced Germany (6,1%). This is exactly what you would expect in an integrated economic and monetary area and this process should continue in the future, provided that appropriate policies are implemented. Economic convergence will therefore boost growth and support the return to debt sustainability. Now, looking at nominal evolutions, a very different picture emerges. During the same period nominal wages grew by a total of 42% in Ireland and 52% in Greece vs only 7,4 % in Germany. The nature of the challenge, therefore, is clear. There has to be a regime change in the way nominal wages and prices are set in some parts of the euro area. As Central Bankers, we have been making that argument for years. One benefit of the crisis has been that this message is now fully accepted by Governments and public opinions. Strong reforms are currently being pushed in labor markets legislation as well as wage determination in the public sector in many countries. I’ll end up with a few words about the banking sector. I have the privilege to be both a Central Banker and a supervisor.
And, the odds are that the cause of the next one will not be the same. I have been involved in mopping up problems in banks long enough to have been involved in Barings, which was an idiosyncratic fraud, not a sector-wide problem. This is the resolution element. In short, we need better fire prevention and better fire-fighting. In the UK we took a major step earlier this year by creating a Special Resolution Regime. But that is not the end of the response to the crisis. Rather, it is where “living wills” or what we now prefer to call Recovery and Resolution Plans, or RRPs, come in. I want to spend the rest of my time setting out what I think should be the role and form of these plans, and why they should be critical tools both for banks themselves, banking supervisors and resolution authorities. I have been struck by the strength of support for RRPs. In April, the G20 leaders endorsed a set of principles from the Financial Stability Board that include strong encouragement for firms to maintain contingency plans and procedures for use in a wind down, with regular reviews to ensure that they remain accurate and adequate. The Financial Stability Board cross-border Crisis Management Working Group, chaired by my colleague, Paul Tucker, has  BIS Review 156/2009  1  published principles aimed at strengthening the ability of authorities to deal with a crisis in certain cross-border financial groups.