These will begin to be implemented in September, under very favourable financing conditions, with the aim of maintaining the current low costs of bank funding and, therefore, of overall borrowing by households and firms. It is perhaps worth reiterating here that the ECB’s monetary policy has had very positive effects on euro area activity and inflation. In fact, by easing financial conditions and reducing financial market fragmentation, the ECB’s expansionary monetary policy has substantially contributed to the improvement in the euro area economy. At the same time, it has prevented the period of negative inflation rates experienced by the European economies further to the crisis-induced recession from turning into a deflationary spiral. Specifically, according to some ECB papers8 and to in-house Banco de España estimates, it is believed the set of monetary policy measures adopted since mid-2014 will have an  7  See M. Draghi (2019), “Twenty Years of the ECB’s monetary policy”, ECB Forum on Central Banking, Sintra, 18 June 2019. 8 Hammermann et al. (2019), “Taking stock of the Eurosystem’s asset purchase programme after the end of net asset purchases”, Economic Bulletin, 2/2019, ECB. 9/16  overall impact on the euro area’s real GDP growth and inflation. In both instances this is expected to be cumulatively of the order of around 2 pp between 2016 and 2020. It should also be underscored that these effects have arisen from the combination of the various instruments used. Beyond their individual impact, these instruments mutually complement and reinforce one another.
There is, of course, no silver bullet that could be applied universally to all countries. Nevertheless, euro area policy-makers should look closely at the recent experience of the Baltic countries and draw the appropriate lessons. I see at least one encouraging take-home message: if properly designed and effectively communicated, if fully supported by international lenders, economic adjustment does not necessarily imply political suicide. III. Lessons for Latvia  Being here in Riga, let me conclude with a few observations about the lessons for Latvia itself. The end of the programme should not mean the end of the adjustment efforts. Key challenges remain also for this country to ensure the sustainability of the fiscal adjustment, to strengthen the fundamental drivers of sustainable and balanced growth and to prevent macroeconomic imbalances from building up again. As regards euro adoption, the challenges that some euro area countries are currently facing illustrate clearly the importance of sustainable convergence. Very careful preparation is required to make sure that convergence continues also after euro adoption. Measures to reduce inflation temporarily or easily reversible measures to lower the fiscal deficit do not represent sustainable convergence. The decision to adopt the euro is a very fundamental one and should not be taken lightly. The ECB published its Convergence Report 2012 last week and we came to the conclusion that Latvia does not yet fulfil all convergence requirements. So there is still a way to go for Latvia and the euro will not come for free.