and many eastern european, middle eastern and african countries. meanwhile, nearly one - third of all international debt securities are denominated in euro, and the euro accounts for about 25 % of global foreign exchange reserves. since its introduction, the euro has become the second most widely used currency in the world. moreover, with 646 billion banknotes and coins in circulation, the euro has already overtaken the us dollar. 1 in a global perspective the eu and the euro area are unique. no other model of supranational cooperation or agreement has achieved such a high level of integration. in the classification of the imf, the euro area is the 3rd largest economic area in the world in terms of real gdp ( 15 % ), after the us ( 20 % ) and developing asia ( 27 % ). moreover, following a few years of economic sluggishness, the euro area is now becoming an ever larger player in the global economy, thereby contributing to an urgently needed usd banknotes and coins : usd 810 bn = eur 615 bn ( all data and the exchange rate at end - 2006 ). rebalancing in global economic growth. economic activity, in fact, accelerated to 2. 7 % last year, and since the start of monetary union real gdp growth has averaged 2. 1 %. the ecb staff projections from march 2007 see growth ranging between 2. 1 % and 2. 9 % in 2007 and between 1. 9 % and 2. 9 % in 2008. unemployment has declined significantly, from 9 % in 1999 to 7. 2 % ( march 2007 ), a development which is particularly welcome. 12 million new jobs have been created since 1999. on average, inflation has stood at 2. 1 % since the start of emu, which shows that inflation expectations are firmly anchored. hence, price stability has created a favorable environment for investment and growth in the euro area. concerning the outlook for prices, the ecb staff projects annual inflation to average between 1. 5 % and 2. 1 % this year and between 1. 4 % and 2. 6 % in 2008. risks to the medium - term outlook for price stability remain on the upside, relating in particular to stronger than currently expected wage developments in a context of ongoing robust growth in employment and economic activity. given the vigorous monetary and credit growth in an environment of already ample liquidity, the governing council of the ecb will continue to be strongly vigilant in order to

capacity – for ireland both outward and inward – would likely be a conspicuous part of the supervision in the years ahead. the other two banking elements of the 4 presidents ’ proposed “ integrated financial framework ” ( formerly known as a “ banking union ” ), namely the establishment of a european bank resolution scheme fund and a european deposit insurance scheme, could help break, for the future, the damaging link between bank failure in smaller countries and the taxpayer burden in those countries. in particular, centralised resolution, combined with the european commission ’ s recent proposals on bailing - in uninsured bank creditors would clearly ensure that what happened in ireland would not be repeated elsewhere in the future. it may not be popular these days in some circles here to speak favourably of “ more europe ”, but in this arena of financial integration at least, i therefore believe there is very little by way of threat to ireland in moving forward ; rather there is quite a lot to gain. indeed, the irish experience points rather clearly to the need for measures along these lines. http : / / www. consilium. europa. eu / uedocs / cms _ data / docs / pressdata / en / ec / 131201. pdf. bis central bankers ’ speeches an opportunity for coherence in system design was missed in 1991 by the architects of the euro area ; it should be seized now. of course there will be practical and political difficulties, and the 4 presidents ’ report leaves many critical decisions unanswered, but the broad direction is established. debt yield spreads in europe – too high it remains to be seen whether the initiatives in this direction ( banking supervision, deposit insurance and resolution ) will be enough in themselves to reassure markets, sufficiently narrowing again the spreads on government debt to the tight range that was observed throughout almost all of the first decade of the euro. there is, of course, much more in the 4 presidents ’ report than just the proposals on financial integration : specifically that report also covers the large areas of integration for budgetary and economic policy frameworks and a strengthening of democratic legitimacy and accountability. i will not go into those matters here, but all in all it is to be expected that, while designing and adhering to such a road - map is surely necessary to rebuild both market and especially intergovernmental confidence, it may take time for market yields to converge to the extent desired. recall that one of the maastricht criteria for admission to the euro