the collective actions of governments, policymakers and economic and financial agents, including those of us in this room today. in my remarks this morning, i will discuss the role of financial integration as both a key enabler and an outcome of the aec. i will talk about where we are in this process and some of the priorities for policy frameworks as well as for the management of risks by financial institutions as we move forward. this, i hope, will provide useful inputs for your deliberation and discussion in this conference. the case for greater financial integration asean is home to more than 600 million people and if considered as a single entity, would represent the sixth largest economy in the world with a combined gdp of usd2. 5 trillion. according to the oecd, the region is projected to sustain an average annual growth of 5. 6 % bis central bankers ’ speeches over the next four years and is expected to be the fourth largest trading bloc by 2050. concurrently, the standards of living among the general populace will continue to improve. household purchasing power has risen significantly over the last decade, transforming the region into a thriving hub of consumer demand. the size of asean ’ s consuming class is expected to double from 81 million to 163 million by 2030. by 2020, asia is estimated to account for more than half of the total global middle class population, with asean representing more than usd2 trillion of additional consumption within the region. also, as the sources of economic growth become increasingly domestic - based, this enables many economies to diversify their sources of growth. an important development is the significant increase in intra - regional trade. these developments augur well for the region and would expand domestic demand and further fuel greater intra - regional trade among asean member countries. the promise of higher living standards and employment is also drawing large numbers of people from the countryside to cities. today, just over a third of asean ’ s population are living in urban areas. this is expected to rise to 45 % by 2030. integrating national financial systems within the region is key to unlocking asean ’ s enormous economic growth potential. as a critical component of the aec, financial integration will significantly enhance the efficiency and effectiveness of intermediation and allocation of resources. this is crucial as the region pursues greater economic prosperity that is both inclusive and sustainable. by allowing the region ’ s financial resources to move more freely across borders, financial integration will open up new opportunities for businesses and trade, enhancing further financial link

, the economic recovery is only gradual. however, should high excess liquidity continue to prevail once there is a significant strengthening of economic activity, it could lead to inflationary pressures in the medium term. we will therefore continue to carefully examine monetary developments. in summary, the economic analysis indicates that the main scenario for price developments in the medium term continues to be in line with our definition of price stability. this picture is confirmed by cross - checking with the monetary analysis. turning to fiscal policies, i have already mentioned that we expressed deep regret following the ecofin council meeting on 25 november. furthermore, we stressed our support of the commission's views on the ecofin council's conclusions. we also took note of the commitments made by france and germany to correct their excessive deficits as rapidly as possible and at the latest by 2005. moreover, we noted that the ecofin council stands ready to take a decision under article 104 ( 9 ), on the basis of the commission recommendation, should the two governments fail to act in accordance with their own commitments. we strongly urge the governments concerned to live up to their responsibilities. confidence in the soundness of public finances is essential for sustainable growth in consumption and investment. the overall fiscal framework of the stability and growth pact remains of central importance and should be fully respected. the same applies to the requirement to avoid excessive deficits, laid down in article 104 of the treaty, and to the reference values of 3 % and 60 % for the deficit and debt - to - gdp ratios respectively, specified in the protocol on the excessive deficit procedure annexed to the treaty. these are the foundations for trust and confidence in emu. trust and confidence are also crucial in the context of structural reform. enhancing the competitiveness of the euro area, in particular in labour and product markets, increasing the efficiency of the tax systems and ensuring the sustainability of social security schemes all foster a better allocation and utilisation of capital and human resources. there is no doubt that measures in these respects improve the growth perspectives of the euro area. however, in order to foster confidence in the shorter term, convincing assurance must be given that these challenges are indeed being tackled in a decisive manner and that clear action is being taken. while some progress has been made, the governing council strongly encourages governments to accelerate the implementation of structural reforms and also calls upon social partners to fully commit themselves to the objective of making the euro area a more dynamic and innovative economy. we are now at your disposal for