Hence, to estimate the direct cost to the taxpayer of the aid provided to banks, we should first consider the amounts paid out by the FROB to these banks, add this to the expected cost of the APSs extended by the FROB (at Banco de Valencia and Caja Sur) and of other guarantees and coverage offered by it in connection with resolution processes, and subtract the amounts recouped or expected to be recouped. That is to say, we should firstly calculate the funds paid out by the FROB to purchase shares or contingently convertible bonds, which amount to € million, adding these to the estimated cost of the APSs and other guarantees granted in resolution processes which, on the latest valuations available, account for € million. From this amount it would be necessary to subtract the recovery of the amounts disbursed through the redemption of convertible bonds subscribed by the FROB or the disposal of the FROB’s shareholdings in the banks receiving aid. Here, the € million from the sale of  2  As at 30 April 2014. BIS central bankers’ speeches  3  NCG and the return of the aid granted to Banca Cívica by Caixabank3 should be recorded. Further, the convertible bonds subscribed by the FROB in Caja3 (absorbed by Ibercaja), CEISS (absorbed by Unicaja) and Liberbank, are highly likely to be redeemed before 2017, entailing the return of € million.
It results from standard economic analysis that fast growing economies require a higher level of real interest rates to remain on a sustainable path. Monetary policy in the Euro area is designed for advanced economies and would be inappropriate for less developed economies. Indeed, a premature entry would imply a downward shock on interest rates and other policy parameters such as reserve ratios. This would generate supply/demand imbalances, credit booms and asset or consumer prices inflation resulting in financial vulnerabilities and deteriorating competitiveness. It should come as no surprise that the third element relates again to the advancement in structural reforms: these are preconditions for ensuring viable economic development inside a monetary union. Such reforms are necessary in order to enhance flexibility, thus giving the economy the necessary adjustment capacity required in a monetary union. The key role of structural policies naturally includes the conduct of fiscal policy reforms (tax, pensions, and social security) and investments in public goods (infrastructure, education, healthcare, etc.) that have to be completed before entry in order to provide enough leeway for fiscal policy to serve as a stabilisation instrument inside the monetary union. The New Member States that have joined the EU since 2004 have made considerable progress in nominal and real convergence. Recovering from historic episodes of economic contraction, hyperinflation and exchange rate depreciation, these economies have recorded gradual macroeconomic stabilisation characterised by disinflation, high rates of GDP growth and real exchange rate appreciation.