House prices posted positive dynamics, albeit significantly slower than those seen in many EU countries (Figures 35 and 36), on the back of higher household income, individuals’ improved expectations on their financial standing and of further extremely low interest rates (Figure 37). Nevertheless, only a small part of real estate transactions are loanfinanced. In the medium run, the potential risks that may arise from mortgage-backed loans refer to the high interest rate sensitivity in the case of debtors having taken housing loans (Figure 38). The five risks summarised above are cyclical, being related to the developments in the business and financial cycles. They can be amplified, in the future, by a potential deceleration of GDP dynamics, which will also raise the issue of the next growth engine (after the engine of domestic consumption slows down). The increase in financial intermediation for the corporate sector could be this alternative driver, but only in the context of improving payment discipline, lower uncertainties and a reversal to a positive market sentiment. These five cyclical risks are compounded by a fundamental, structural problem specific not only to the economy, but also to the Romanian society, i.e. the demographic problem. This is generated, on the one hand, by the natural decline in population, and, on the other hand, by emigration. Although the GDP hit a 25-year high, Romania continues to see further emigration and ageing population.
Gratitude also to the leaders who maintained a steady hand during the 1990s in the run-up to the euro, in a very difficult environment. This anniversary is no time for complacency. But for continuous efforts, because the challenges lying ahead for Monetary Union will be numerous and demanding. As one of the major central banks in the industrialised world, we, like the others, have three challenges to cope with in our monetary policy-making: rapid technological progress, globalisation in all its dimensions, including the transformation of global finance, and population ageing. On top of those three major challenges, the ECB and the Eurosystem have to cope with two other important, self-assigned challenges. The first is the deepening of economic and financial integration at continental level, the progressive completion of a single economy with a single currency; we are the only central bank which is actively contributing to a major structural transformation of its own economy. The second is enlargement: we are called upon to extend progressively the euro area across the European Union as a whole; we are also the only central bank to undertake such an endeavour. Economic Union itself has its own challenges. I see three major challenges for the Eurogroup, for the governments of the euro area and for the Commission. The full and complete implementation of the Stability and Growth Pact, which is a crucial component of EMU in the absence of a European federal budget.