prices in the economy as a whole are falling steadily. in such a situation, workers ’ wages are too high in comparison with the overall price level, and collective wage agreements cannot simply be changed. therefore, production becomes too expensive and businesses stop investing because they assume that demand is falling. it is a vicious circle that leads to sharply declining economic activity and rising unemployment – the great depression in the united states in the 1930s has taught us that. can the risk of deflation be regarded as real at present? we are not expecting deflation, but there are risks that need to be addressed. prevention is better than cure. that is why we had to take action before the damage is done, because the inflation expectations of consumers and businesses are falling. that is dangerous. also, a period of low inflation that is too prolonged entails significant risks. people buy what they need, and whatever they can afford. inflation expectations do not play any role in that. bis central bankers ’ speeches oh yes, they do. people are guided by expectations, even though they may not always be aware of it. people have an idea of what their future holds, of what they want, what they will spend and what they earn. they make rough estimates of what they can afford. if these expectations are not fulfilled, they experience a shock. and there was a risk of that occurring in the euro area, because deflation means less growth and lower income. the ecb is doing all this solely for the benefit of crisis countries, i. e. italy and co. no, we work for the euro area as a whole. we have attempted to achieve our goals through low key interest rates, through purchases of covered bonds and through favourable loans to banks. all that has helped, but not to the extent desired, nor did it achieve what was required. that is the reason why we will now start purchasing government bonds. we have to use all instruments of monetary policy to ensure price stability across the euro area. what makes you so sure? i do not know what historians will write about the ecb at some time in the future, but every single measure we have taken was taken with due consideration of the risks involved, including the risk entailed if we had not done anything. what is also clear, however, is that the governments must now implement structural reforms. why does the ecb not put euro area governments under greater pressure? this is not our role. if we were to make deals with governments on

growth in emerging markets and its resilience are good news for all of us. it suggests that the world economy may be better able to rely on the dynamism of these economies, in particular should growth in other regions lose some momentum. emerging countries ’ citizens have reaped the benefits of such rapid development with higher standards of living. over the last decade, gdp per capita has risen by 30 % on average, to reach over usd 9, 000. in india, the rise has been even faster, with a doubling of real gdp per capita in the last ten years. the integration of emerging economies into global markets for goods and services has been similarly swift. if you look at world exports of goods and services, the combined share of emerging markets doubled between the early 1990s and 2006, to reach roughly 30 %. again, the integration of india into global markets has been even faster. india ’ s share in world exports of goods and services tripled between the early 1990s and 2006, to close to 1. 5 %, with a notable acceleration in the last three years, due to dynamic exports of services, of course including it and it - enabled services. let me turn now to the microeconomic evidence for the growing importance of the emerging markets, which is perhaps even more striking. here are a few examples. four companies among the world ’ s 20 largest in terms of market value originate from emerging markets. 5 two oil and gas firms, one russian and one chinese, rank in the top ten. moreover, according to forbes, seven of the 20 richest individuals in the world are from the emerging markets, with three from india alone. 6 the number of millionaires ( in terms of us dollars or euro ) is rapidly rising ; forbes estimates that there were some 80, 000 in india in 2005. 7 of course, that is not to say that the challenges posed by income distribution are not among the highest priorities of most emerging market countries, including india. eliminating poverty is at the top of the agenda. long - term economic outlook the present looks promising for emerging market economies, but the future seems even brighter. the projections for long - term growth, based on demographic trends and models of capital accumulation and productivity, tell us that emerging markets are likely to become even weightier in the world economy tomorrow than they are today. of course, projections at very distant horizons are somewhat speculative, but they do offer an insight into possible secular developments. in this respect, one study found startling results regarding