are currently seeing the direct effects of such external developments on the hicp rate of inflation, with 2. 3 % in august and, most likely, a higher rate in september. earlier expectations that the high annual increase in energy prices would gradually moderate in the course of 2000, owing to a levelling - off or even decline in energy prices, have not materialised thus far. hence, it will be some time before hicp inflation returns to rates below 2 %. the action which we have taken today should be understood as a means of maintaining confidence in price stability over the medium term. as i said at our previous press conference, higher oil prices imply a loss of income for the economy as a whole. in a market economy, the rise in the price of energy is to be reflected in relative price adjustments, so it should affect supply and demand in relation to both particular sources of energy as well as other goods and services. it will be important for social partners to continue to act as responsibly as they have done in the recent past. wage moderation has made an important contribution to the progress in job creation and in reducing unemployment observed so far. a continuation of this attitude will be a key factor in contributing to non - inflationary growth at a robust pace and should ultimately result in higher employment and the preservation of real income growth for wage earners as well as in sustainable conditions for companies. the governments of the euro area countries can help the economy to adjust smoothly to the increase in energy prices in several ways. one way is to step up efforts towards structural reform aimed at enhancing the functioning of labour and product markets. this will increase the resilience of the economy to adverse shocks, increase competition and ensure appropriate price - setting by companies. governments must avoid the mistakes of the past, when fiscal policies were relaxed in response to the effects stemming from increases in energy prices. at the current juncture, fiscal policies should avoid any procyclical bias and should aim at reaching sustainable fiscal positions in the medium term more quickly.

primary markets. however, in the medium term this cannot be an alternative to the restoration of a deep and orderly functioning market which offers true secured funding possibilities. i strongly believe that the industry needs to make serious efforts to revive the interest of third party investors. one very telling development in this context is that, as a consequence of the retained issuance, the quality of the documentation underlying issuances, such as pre - sale reports by rating agencies and prospectuses, seems to have deteriorated. hence, contrary to expectations that issuers would enhance transparency to restore investor confidence, we witness signs or indications of the opposite development towards ever more opaque markets. i will come back to this issue of transparency later again. 5. taking stock let me take stock at this stage. overall the operational framework of the eurosystem has served us well during the ongoing financial market turmoil. in particular, thanks to the built in flexibility of its collateral framework, the eurosystem has been able to step in effectively when intermediation in interbank markets deteriorated, without the need to make changes to its framework. as a side effect of the broad range of assets accepted as collateral, the framework helped us also during the turmoil to address liquidity squeezes in some markets, including the abs market, as it mitigated refinancing risks for asset classes that had become illiquid. this has contributed to financial stability in the euro area. other central banks may have had those effects in mind when they initiated changes to their operational framework in the wake of the turmoil, leading to a significant degree of convergence among the various frameworks. of course, the ability of the eurosystem ’ s operational framework to respond to the challenges for monetary policy implementation posed by the recent period of financial market volatility does not mean that there is no scope for further improvements and refinements. for instance, the eligibility criteria for marketable debt instruments have been kept general in order to ensure that the collateral framework of the eurosystem is responsive to financial innovation. there is therefore a concomitant need for the eurosystem to refine its collateral policy, including the risk control measures, and ensure that the collateral continues to meet the eurosystem ’ s risk tolerance level and allows the effective implementation of monetary policy. this has already been done in the past from time to time, with a view to further enhance the collateral framework. let me give you just two examples. first, different liquidity categories were introduced