we must not forget that the favourable effects on inflation may gradually fall off as inward flows of foreign workers diminish. as immigrants are more willing to substitute consumption for leisure, we might expect their participation rates and the number of hours they wish to work to be higher than those of the native population. at the same time, as most would already try to work to the maximum extent possible immediately after arriving, each of them will have limited availability to further increase their working hours. the labour supply of each immigrant will then become rather insensitive to changes in wages. the result of this is that after a positive shock for economic activity, wages will have to increase substantially in order to convince a given set of foreign workers to satisfy the additional labour demanded by employers. this means that once immigration stabilises at more moderate levels than those we have recently seen in spain, it could be more difficult for labour supply to respond to higher demand, and we ’ d have higher wage and price pressures. but i think the slowdown in immigration in spain is still some way off, so we can expect new arrivals to continue having a favourable influence on output and inflation for some time to come. i am more worried about the risk that the beneficial effects of immigration could weaken the political will to reform the labour market. as we have seen, the arrival of workers with higher participation rates and lower reservation wages normally helps to increase employment and ease wage growth, at least for some types of workers. and that might leave us with a notion that the labour market is more flexible and efficient than it really is. there is a danger that policymakers become over - complacent. in fact, reforms will enhance the gains from immigration, as there is some evidence that immigration offers most benefits in those countries with more flexible labour markets. let me finish by recalling the words of mr. kofi anan, the former united nations secretary - general, from a speech delivered to the european parliament : “ migrants need europe. but europe also needs migrants. a closed europe would be a meaner, poorer, weaker, older europe. an open europe will be a fairer, richer, stronger, younger europe – provided you manage migration well ”. it is hard to disagree with him. managing migration well, will be very good for social and economic stability and will help make our job of maintaining moderate inflation easier.

##roller of the currency ( 2006 ), “ federal banking agencies issue final guidance on concentrations in commercial real estate lending ”, press release, december 6, http : / / federalreserve. gov / newsevents / press / bcreg / 20061206a. htm. bis central bankers ’ speeches hosted by state bank commissioners in 30 states. the presentation of these findings will be followed by a panel discussion by a select group of community banking experts. i hope i have succeeded in whetting your appetite for the sessions that lie ahead, and i encourage you to make the most of this unique opportunity to interact with bankers, regulators, and researchers who share a common interest in the future of community banking. bis central bankers ’ speeches