, my main concern is not whether private individuals will manage to repay their loans or not. the real question here is what will happen to enterprises. with the government itself paying a margin of 3 - 4 %, which source of finance can enterprises rely on? and if the entire economy can only borrow at double - digit interest rates, and even such borrowing is in short supply, how will this reflect on the country ’ s economic growth? at this point, we may safely conclude that the measures taken by the us and eu governments and their respective central banks have so far produced no results, that money has not been costlier for over a decade, that the key policy rates of central banks and the market price of money ( euribor ) are still moving in the opposite directions, that excess money pumped into the banking system by the ecb is returned in the form of deposits rather than lending, while trust among financial agents has troughed and the economy is already heading for recession! 2. it is practically impossible to foresee the future course of the crisis. earlier taboos, such as the valuation of balance - sheet categories, are being broken overnight, the governments are nationalizing the banking sector in order to “ strengthen the market mechanism ”, stock exchanges are even rewarding such moves and there is no end to government plans! learning from history, the governments have clearly decided that it is better to overreact than underreact, but, unfortunately, with little success so far! the future course of events will largely hinge on : • how far will the government go in acquiring ownership of the banking sector and when and how will it pull out – if, indeed, it wants to? • to what extent can central banks replace the financial sector as lenders and should they do so? • what will happen if governments are really faced with the obligation to pay out a major portion of the promised funds, which could well lead to bankruptcy as in the case of iceland? the situation is already unravelling, and a number of countries – primarily ukraine, hungary and kazakhstan – are mooted as potential “ victims ”! why these countries? the answer is fairly simple : a ) high level of debts maturing in the next year – question of possibility and cost of refinancing, b ) high share of foreign currency clause indexed loans, with savings mostly in the domestic currency – at times of exchange rate turbulences, c ) heavy dependence on inflow of foreign capital ( foreign direct

euro area, the governing council welcomes the reaffirmed commitments of the governments of euro area countries with fiscal imbalances to adhere to the objective of achieving balanced budgets by 2003 - 2004. the confirmation of the political will to continue along the path of fiscal consolidation is most appropriate. the governing council supports the actions taken by the european commission in the context of the stability and growth pact and the subsequent outcome of the ecofin council meeting last month. it is now necessary to remain vigilant in order to ensure strict adherence to the medium - term plans and rigorous implementation of the procedures of the stability and growth pact. in order to further improve the fundamentals of the euro area and to put the expected recovery on a broad and sustainable basis, euro area countries must strengthen their efforts to implement comprehensive structural reforms. over the past few years progress has been made with regard to enhancing the flexibility of euro area product and capital markets. euro area countries have also made some headway in terms of improving the way their labour markets operate. these reforms, together with moderate wage developments, have contributed to the strong employment growth and the considerable reduction in unemployment witnessed in many euro area countries in the last cyclical upswing. however, it is worth noting that despite the continued high unemployment in the euro area, firms continue to report difficulties in terms of recruiting suitably qualified workers. this suggests that further improvements in the functioning of euro area labour markets and their ability to match labour supply and demand are needed. evidence gathered in a recent eurosystem analysis, which will be published shortly, supports this view. in this context i would also like to stress that structural reforms in different markets should not be seen in isolation. the more efficiently euro area product and capital markets function, the greater the success of labour market reforms will be in creating employment opportunities. we are now at your disposal for questions.