liquidity conditions of the eurosystem. the most recent examples include the weekly publication of the value of all monetary policy portfolios, i. e. the securities markets programme ( smp ), the covered bond purchase programmes and the abs purchase programme. transparency is key, especially in times where unconventional measures are being taken. this is why the governing council committed to the publication of an account of its monetary policy discussions. the future of emu governance finally, let me turn to the governance of economic and monetary union. in the short run, our overarching focus should be on the full and consistent implementation of the existing fiscal and macroeconomic surveillance framework. this is key to bringing down high public debt bis central bankers ’ speeches ratios, to raising potential growth and to increasing the resilience of the euro area economy to shocks. now is certainly not the right moment for complacency, neither in the area of fiscal policies nor with regard to structural reforms. it should be clear that monetary policy alone cannot do all the “ heavy lifting ”. all policy actors – both at the national and the european level – need to do their part. this should be embedded in a comprehensive strategy that puts the euro area economy back on track. the stability and growth pact should remain the anchor for confidence in sustainable public finances – throughout the procedural steps under the agreed framework. with regard to macroeconomic surveillance, the implementation of structural reforms is imperative and should be a matter of priority for the euro area governments. in the medium to long term, we need to explore various options to further ensure a smooth functioning of emu. during the crisis, euro area member states – including finland – have made a significant effort in terms of strengthening both discipline and solidarity within emu. while this has contributed decisively to overcoming the crisis, i believe that this is not yet fully commensurate with the long - term necessities of being part of a monetary union. in the euro area, economic policy choices are so interdependent that, ultimately, sovereignty over economic policy - making should be exercised jointly. therefore, we need, in my view, to further share sovereignty in this realm. this could translate into a leap forward from common rules to common institutions. the forthcoming report that the euro summit has commissioned on the future of economic governance will present a good starting point for further reflection on these matters. i am here today to represent the ecb and am looking forward to a constructive exchange of views. therefore

core rate in the first half of 2004, before steadying out at a rate close to core inflation. in view of the domestic inflation situation and the underlying momentum of domestic demand, we have raised our target overnight rate by 25 basis points on each of our last two policy announcement dates — in march and in mid - april — bringing it to 3. 25 per cent. as i said before, economic, financial, and geopolitical uncertainty figured prominently in the global picture last october. some of the geopolitical and financial uncertainty has lifted in recent months, and the bank expects that it will continue to recede. however, weak domestic demand in some regions of the world is still a concern. so, over the near term, a degree of global economic uncertainty remains. even with all this, the risks confronting the world economy now appear to be better balanced than they were last autumn. and, by year - end, we expect that business and household confidence levels should improve. in canada, domestic demand has remained quite strong. there is uncertainty, however, about the possible economic impact of severe acute respiratory syndrome ( sars ), particularly in the greater toronto area. as i said last week, we expect that economic growth in the second quarter will be somewhat weaker than we projected in the monetary policy report because of the impact of sars. but it is too soon to make an assessment of the magnitude of its effect on economic activity. we continue to monitor the situation very closely. we expect that the canadian economy will strengthen towards the end of 2003, partly thanks to a pickup in economic activity in the united states. average annual growth in canada is expected to be about 2 1 / 2 per cent this year. during 2004, our economy should strengthen further, expanding at a rate above its 3 per cent growth of potential. this means that most of the small amount of economic slack that is likely to open up in canada during 2003 will have closed by the end of next year. for this reason, the bank continues to believe that further reductions in monetary stimulus will be necessary over time to return inflation to its 2 per cent target and to sustain output levels close to capacity. the timing and pace of further increases in policy interest rates will depend on the strength of domestic demand, the evolution of inflation expectations, and the pace of economic expansion in the united states and in overseas economies.