##ctual analysis is inherently impossible, and i will not pretend to know the answer. but let me just say that we have been happy to sit out the storm within the euro area rather than outside it. the exchange rate is not a straightforward policy instrument. although in principle, it may support faster adjustment of real imbalances, experience has shown that it becomes difficult to control precisely when the challenges are greatest. in times of crisis, the exchange rate tends to respond to financial disturbances rather than to real imbalances and, more often than not, it becomes a constraint on policies rather than a useful adjustment channel. membership in the euro area eliminates one potential adjustment channel, but above all, it eliminates a major source of uncertainty at times when uncertainty is already high. we are glad to accept that trade - off. the final viewpoint to euro membership relates to the role of a small national central bank in the decision making process of a large currency union. decision making in the eurosystem : getting your voice heard this is one aspect of the single currency that is often misunderstood ; what actually is the role of national central banks in the ecb and in the eurosystem? over the past ten years we at the bank of finland have been asked often why the bank of finland still matters. isn ’ t everything decided in frankfurt? what is the role of national central banks? how do the ecb and eurosystem operate? as a result of the maastricht treaty and practices established over these ten years, the institutional structure of the eurosystem is carefully balanced. the hub remains relatively small in comparison to the spokes. in important ways, the eurosystem remains highly decentralised. all important decisions are taken by the governing council, which usually meets in frankfurt. a large majority of the council ( all but six members of the executive board ) are governors from national central banks. they sit around the table making decisions in their personal capacity as members of the governing council, not as representatives of their countries. they are fully independent in this role as are the members of the european commission or the european court of justice. but when each of them is also a head of a national central bank, it is clear that their staff is deeply involved in preparing all issues on the agenda of the governing council meetings. so when the governor takes off to frankfurt, he is thoroughly prepared and carrying loads of papers and briefing notes in his briefcase. the single currency has delivered many important benefits

* * let me turn to the second symptom, which derives from the first one, i. e. inconsistency. over the last ten years the world economy has undergone substantial changes. i won ’ t list them all, but, to be sure, there has been a massive transfer of resources between and within countries. the change in the terms of trade has led to a huge transfer of purchasing power from advanced economies to oil and commodity exporters while globalisation has brought considerable benefits to low - cost exporters of manufactured goods. just to give an estimate, the transfer of purchasing power due to the increase in oil prices alone amounts to around 3 trillion us dollars over the last decade, about 7 % of advanced economies ’ gdp. 2 the period between 2002 and 2007 saw the world economy grow at its fastest rate since the 1970s. however, this has masked notable differences between advanced and emerging economies. for the developing world, growth has been at its strongest since the second world war. advanced economies, on the other hand, have recorded a worsened performance. for the united states, in particular, the last decade has been the worst, in terms of per capita income growth, for over 100 years, with the sole exception of the 1930s. growth in europe has also been quite modest compared with previous decades. a significant redistribution of income has also taken place within countries. in some advanced economies, notably the united states and the united kingdom, the index of income inequality has risen. 3 in general there has been a stagnation or even a tendency towards a reduction in purchasing power for the lower - income groups, as a result of weaker income growth and higher price increases for products such as food and energy. income based on the amount of net oil imports by advanced countries, comparing a scenario with oil prices unchanged at 1999 levels with actual data. i thank michael fidora for this back - of - the - envelope calculation. for an extensive treatment see a. brandolini and smeeding ( 2007 ) : “ inequality : international evidence ”, prepared for the new palgrave dictionary of economics. growth disparities reflect increasing differences in human capital, access to technology and educational levels. theory and past experience both suggest that competition from low - cost countries tends to penalise low incomes and employment advanced economies ’ sectors with lower technological content. the acceleration of technological change and the dismantling of barriers to trade have increased international competition and brought about adjustment in a much shorter time than expected.