event, i should stress that at present, even following these interest rate rises, the financial conditions in place remain conducive to economic activity. having a monetary policy geared to ensuring price stability is a vital requirement for economic dynamism to be sustainable. however, monetary policy can in no way supplant the other economic policies which, in fact, are of paramount importance for the growth of our economies. in particular, the european authorities must strive more resolutely to eliminate the structural obstacles holding back growth potential. the relatively disappointing results in terms of economic expansion in the euro area in the past decade are due, above all, to the scant dynamism of labour productivity which, in turn, is largely a response to the relatively modest pace of innovation, and its spread and application to the rest of the economy. overcoming this problem requires the implementation of a broad array of measures aimed at stimulating human capital formation, providing for the creation of new companies promoting the development of new products and combating rigidities in the different markets. on the other hand, there has recently been an improvement in the use of the labour factor, suggesting that labour market reforms and wage moderation have yielded some benefits. however, much room remains for further progress, since the unemployment rate is still high and the number of hours worked and the employment rates for specific groups ( women, youths and older individuals ) are too low. on the fiscal policy front, budget balances have recently seen what was in part an unexpected improvement. this is because the pick - up in activity has given rise to more vigorous growth in certain tax receipts than was foreseen a year ago. the increase in revenue is therefore essentially transitory, therefore the authorities of these countries would be mistaken to become complacent and believe that budgetary consolidation has become a less pressing task. on the contrary, it is necessary to maintain sufficient control of spending in the economic upturn so as to speed up the correction of budgetary imbalances. this objective is vital for creating a stable macroeconomic environment and increasing the headroom available to tackle the challenges posed by population ageing in the future. * * * * * * the changes i have described in the international setting, where the greater dynamism of the euro area and, therefore, of our export markets is notable, along with the gradual withdrawal of the impulse provided by monetary conditions, all shape a favourable scenario in which the spanish economy may continue growing at a high

required. at the same time, the crisis has raised all market participants ’ risk awareness. although the possibility of another exaggerated “ search for yield ” cannot be generally ruled out in future, risk managers can initially be expected to take a more critical stance. my next point is directly related to that : i am firmly convinced that investors will tend to spread their risk even more than they do at present ; investments will therefore be more diversified and also smaller overall. finally, i believe that “ covenant lite ” structures have seen their heyday. in a nutshell, this means, especially for private equity companies : more banks involved, smaller credit volumes and more security! not a bad new formula for the economy, in my view. reforming the financial system will therefore lead to structural change overall, which will affect private equity firms not exclusively, but particularly noticeably. as always, this creates new challenges as well as new opportunities. in the following, i will mainly focus on the new opportunities that i believe are opening up in the single european market. 4. where do we stand in terms of regulation of the private equity industry? before i start, let me say that the european union is a pioneer in the regulation of alternative investments! the european directive on alternative investment fund managers ( aifm ) has now been passed and is to be the regulatory framework for alternative investments in the european union from mid - 2013 onwards. in the united states, private equity funds are also to be subjected to higher registration and transparency requirements, although the details of the dodd - frank act, which was passed in the united states, on this issue are not yet known. i do not believe, however, that the united states will present any major new standards in terms of the surveillance and regulation of the private equity industry. while the european aifm directive does go significantly further than the dodd - frank act, it does not go too far, in my opinion. first, it outlines general requirements for all alternative investment fund managers. these core provisions include registration and information duties vis - a - vis the competent supervisory authorities, minimum capital requirements, disclosure requirements towards investors and targeted organisational and operational stipulations. moreover, private equity fund managers will be subject to specific information duties when investing in a non - listed company. second, asset stripping will, in future, be banned for a certain period after the acquisition of control – subjecting it to a “ retention period ”. in a bid to strengthen the single european market, the aifm