typically, productivity performance is often poor in a downturn as output growth falls back but employment does not respond immediately. this performance was also recorded despite a peaking in information technology investment, but perhaps the impact of previous investment was only evident with a lag. in contrast, in europe, the downturn saw further declines in productivity growth, although there has been some improvement recently. possible explanations for these trends and the implications of their continuation will be central to the afternoon session. clearly, the prospects for european productivity growth are very important, not least, because in the future population ageing will mean that each worker will be supporting more dependents. before concluding, i would like to say something about the links between the conference topics and central banking. there are a number of important ways in which monetary policy and potential output growth interact. for example, it is important for monetary policymakers to have a reasonably accurate estimate of the sustainable rate of growth of the economy, so that the stance of policy can be adjusted in a timely fashion to avoid inflationary pressures emerging in an economy. equally, monetary policy can itself contribute to maximising potential output growth by maintaining price stability. relative price movements and the required re - allocation of resources that they may indicate are important signals and they can be distorted against the background of unstable prices. it is also important to recognise what monetary policy cannot achieve. monetary policy cannot permanently raise output levels through adopting a stance that is too accommodating. this might increase demand in the short - term but it will ultimately hamper, rather than boost, the economy's growth potential and is likely to end in a damaging inflationary episode. in a specifically domestic setting, the bank sees itself as having role in contributing to policy formation, specifically, by encouraging the adoption of policies that support long - term sustainable development. it can do so by sharing the results of its economic research and facilitating the discussion of important policy issues. today's conference contributes to the bank's overall efforts to meet its goals in this regard. in conclusion, i am looking forward to an interesting and stimulating discussion and exchange of views. i will now pass you over to the bank's assistant director general, tom o'connell, who will act as chairman for today's sessions.

role should enforcement play for prudential breaches? and how should senior management distil down the essence of the new supervisory model and approach, so that it can be communicated and understood easily by both firms and front - line staff? for example, in ireland, our new approach is one of “ assertive, risk based supervision underpinned by a credible threat of enforcement. ” that is designed to put a few concepts front and centre : that we operate a risk - based approach, differentiating based on impact and probability ; that there are consequences and accountability for non - compliance ; and that our supervisors are empowered to insist upon actions to mitigate risk where we are not satisfied by the explanation from a firm ’ s management. the best driver for creating this common supervisory culture and model is through the development – jointly by the supervisors that will use it – of a risk assessment framework. this will provide a common vocabulary across the banking union for the description and identification of risk, and set out clear rules of the game for supervisors regarding risk appetite and how problems are to be mitigated. it will therefore be an early, important task, for the ecb to develop a common risk assessment framework and a protocol for on and off - site inspections. stepping back from this long to - do list, it must be pretty obvious what the central challenge is for the new single supervisory mechanism. the key first call to be made is around the “ european capital question ” : is there enough capital in the european banks, in light of asset quality problems and the requirements of crd iv, and, if not, how quickly should you remedy the deficit? this raises the policymaking dilemma, which one might call micro – macro schizophrenia : the tension between the micro - prudential imperative to require more capital, more quickly, and macro - prudential concerns over the implications for pro - cyclicality and sovereign debt sustainability. it ’ s most obvious form may be found in peripheral eurozone countries but the condition is, of course, widely observed! the micro - prudential supervisor ’ s concern for more capital, faster, is rooted in scepticism over the asset quality of the european banks ’ balance sheets, due to practices of bis central bankers ’ speeches forbearance and failure to recognise embedded losses. it is compounded by the concern that the use of bank internal models, creating risk weights from historical losses, is masking or understating problems. and it is heightened by