should also contribute to boosting confidence in the financial system in the short run, thus promoting economic recovery. fiscal policy last, and definitely not least, it is also essential for sustainable growth and prosperity that confidence in the long - term soundness of public finances is maintained. government deficits and public debts are rising substantially in most countries as a result of the economic downturn, discretionary measures to stimulate the economy, and the funding of the bank support schemes. this is partly inevitable – due to the downturn – and partly necessary – to help stabilise the economy and the financial system – in the short run. but it is also imperative that fiscal policies are designed and implemented in a manner that strikes the right balance between the need to support the economy ’ s recovery and the need to preserve the confidence in the soundness and sustainability of public finances which is key for the long - term performance of the economy. iii. conclusion i have used the word “ confidence ” several times. the severity and duration of the current economic and financial crisis is partly a consequence of the reduced confidence in the prospects of the economy and the soundness of the financial system. the recovery of the economy also hinges on the restoration of consumer and business confidence that can contribute to the revival of spending and investment, and the return to normality in financial markets and the banking system. the rebuilding of trust will depend on our ability to appropriately combine the policy actions needed to address the immediate challenges with the necessary reforms for establishing an economic, financial and institutional environment that is conducive to sustainable long - term growth. thank you very much for your attention.

##ed policy efforts in all economies, especially the large ones, are necessary so that world trade can be revitalised and financial capital flows stabilised. this will help support the emerging market economies and global growth. the policy strategies pursued need not be identical across countries and regions and the required size of the economic stimulus and the nature of the other measures taken need not – and should not – be the same, as structural and conjunctural conditions differ. nevertheless, a similar orientation and consistency is warranted. see international monetary fund, global financial stability report market update, 28 january 2009, p. 2. based on data available up for january 2009. since the intensification of the financial crisis in september 2008, central banks and governments globally have acted in a decisive and concerted manner to contain the adverse effect of the financial crisis on the real economy and promote its recovery. in the euro area, the actions taken by the ecb and the eurosystem are unprecedented in size and scope. government support for financial institutions in the form of recapitalisations, guarantees on bank debt and, more recently, asset relief schemes, have been significant and the pertinent measures are progressively being implemented. and the fiscal stimulus packages of euro area governments are substantial, amounting to a total of about 2 % of euro area gdp over this year and the next. the immediate priority of macroeconomic policies and bank support schemes is to promote the economy ’ s recovery and preserve price and financial stability. yet, a fundamental policy objective should be that the recovery of activity and the repair of the financial system have to be achieved in a manner that will ensure a sustained growth performance and will prevent the recurrence of episodes of financial imbalances and market excesses that can threaten again financial stability and economic welfare. put differently, it is important that the policies and reforms pursued today lay the foundations for sustained growth. let me now elaborate on these issues by focusing on the role and contribution of central bank policy and of financial system reform. central bank policy the ecb ’ s monetary policy and provision of liquidity have played a key role in containing the downside risks to price stability, supporting economic activity and stabilising the financial system. the extent of the monetary policy easing since last october has been unprecedented, with key ecb policy interest rates having been reduced by 275 basis points. at the same time, money market rates have declined even more from the peaks reached in october 2008 as a result of the