under way and real disposable income growth is expected to benefit from lower rates of inflation. second, financing conditions are favourable. we also expect the stronger international environment to play an important role in stimulating euro area exports, and both domestic and external factors should foster investment. finally, the positive outlook for the euro area economy is very much supported by sound fundamentals and the absence of major imbalances. turning to price developments, let me first recall that, over recent months, annual rates of consumer price inflation have been affected by several factors of a special or temporary nature. this volatile pattern was broadly anticipated. however, annual inflation rates are currently somewhat higher than was expected a few months ago, with early estimates for march pointing to a figure of 2. 5 %. this is mainly because oil prices have again risen significantly in the more recent period. if sustained, higher oil prices would also have an impact on inflation rates in the remainder of 2002. while inflation rates are expected to fall to below 2 % later in the coming months, this decline may possibly be less pronounced than was foreseen, and inflation rates during this year could turn out to be somewhat higher than previously expected. beyond the shorter term, upward pressure on prices from aggregate demand should, in the light of current projections of a gradual economic recovery in the euro area, remain contained. in addition, the outlook for inflation is fundamentally dependent on wage moderation. such moderation is important not only in order to contain risks to price stability but also to foster employment growth. as i have already noted on earlier occasions, there is some cause for concern with regard to ongoing wage negotiations. fiscal policies in the euro area can also contribute to the maintenance of a favourable outlook for non - inflationary growth. it is vital that the commitments made to achieving balanced budgets by 200304 be firmly followed up in the member states concerned. a continuation along the path of fiscal consolidation is essential, as is vigilance in ensuring strict adherence to the medium - term plans and rigorous implementation of the procedures of the stability and growth pact. equally, the expected recovery should be seen as an ideal opportunity to strengthen efforts towards implementing comprehensive structural reforms a€ “ in public expenditure and revenues and product, labour and financial markets. heads of state and government confirmed this objective during their recent meeting in barcelona. if implemented vigorously, such reforms could increase the growth of real gdp and employment on a sustainable basis. past improvements in the functioning of markets, together with wage mode

all things considered, what do you think the banking landscape will look like in the future? mr. draghi : what we want is a financial industry, and banking sector especially, where you have more capital, less debt, more rules and much stronger supervision. you can have that only if there is a level playing field and broad endorsement by political leaders. it has to be done in a way that you keep the market alive. that's the art of doing it. wsj : you talk about engaging political leaders. the g - 20 is looking at a variety of changes to the global financial regulatory system. what do you hope will come out of it? mr. draghi : i am confident that this group will not only endorse a global response but also contribute to shaping it. wsj : is there a sense that we could see political leaders make a coordinated statement about their goals – for instance, increasing transparency – and then leave it to each nation's discretion on how to implement the shared goal? mr. draghi : yes. i think that is exactly the process. there is a great need for political endorsement at the global level. then implementation is going to be, unavoidably, national. there is a shared sense that one of the great benefits for the financial - services industry was that over the last, say, 20 years, it has became global. nobody denies this benefit now. we will lose all this if we become protectionist again by taking up initiatives purely at a national level. wsj : if you achieve all these goals, is the end result a world in which crises become less likely? mr. draghi : no. i think crises are part and parcel of the market functioning. our aim is to make sure you don't amplify normal market oscillations, either by regulation or by individual behavior. that's the ideal regulatory action plan.