able to see from our recent clarification of the ecb ’ s strategy, we continue to strive for even more effective communication. the future of the ecb let me now turn to the convention on the future of europe and the future institutional status of the ecb. celebrating the fifth anniversary is, of course, a good opportunity for us to look ahead. where will the ecb be in five years time? what kind of challenges will it face? what kind of environment will it be confronted with? today we are very much aware that the constitutional construction of the european union is in a process of evolution. the convention has more or less wrapped up its deliberations and its president, valery giscard d ’ estaing, will present the draft of a new “ treaty establishing the constitution ” to the leaders of the member states in a few days time. as the central bank of the european union, the ecb has followed the work of the convention with great interest over the past one and a half years. the ecb welcomes all efforts to further the construction of a united europe. a european union with effective, functioning and transparent structures and processes, capable of meeting the expectations of its citizens, and equipped to assume international responsibility commensurate with its size and importance, would complement and further bolster the success of economic and monetary union ( emu ). throughout the five years of its existence, the ecb has stated that a strong euro is good for a strong europe. i would now like to add that a strong europe is good for a strong euro. if the european union is re - writing its rulebook by giving itself a constitution, does this mean profound changes to the provisions relating to the ecb and to monetary union in general? throughout the process of drafting the constitution, the ecb has consistently advocated that the economic constitution of the eu - the basic set of rules and provisions for emu as laid down in the maastricht treaty - is sound both in terms of the objectives set and the allocation of responsibilities between different actors and levels of government. the convention appears to have followed a similar reasoning, as it appears that the future constitution will take over the provisions relating to emu in an essentially unchanged form. the single monetary policy is, by its very nature, indivisible and is thus centralised ; hence it remains an exclusive competence of the union. the task of conducting monetary policy, as well as all other central banking tasks

##nue the us dollar swap arrangement for the time being. however, we clearly have not yet returned to the status quo ante. central banks ’ liquidity operations cannot address the underlying causes of the money market tension reflecting a lack of confidence among market participants and uncertainty in other financial markets. iv. the economic outlook and the adjustment of financial markets let me conclude by addressing some policy issues that we are facing this year. the economic outlook for the euro area is surrounded by an unusually high level of uncertainty and is subject to several risks. the ecb ’ s latest assessment confirmed that risks to price stability remain on the upside and that risks to economic growth continue to lie on the downside. the ongoing process of risk reappraisal and balance sheet adjustment in financial markets is likely to last for some time, and it is highly uncertain what impact it will have on the real economy. indeed, the risks to the outlook for economic growth are linked to and are interacting with the uncertainty surrounding the ongoing risk reappraisal in financial markets. although the impact of the financial market turmoil on the euro area economic activity is difficult to measure and forecast, the latest available information and analysis suggest that it is not likely to be sizeable. real gdp is expected to grow in 2008 at a more moderate pace than previously projected, but most recent forecasts from international organisations and the private sector point to gdp growth of between 1. 6 % and 1. 8 % in 2008. the upper end of this range is not far below the euro area ’ s potential rate of growth. the sound fundamentals of the euro area economy and the absence of major macroeconomic imbalances should help cushion the adverse effects of the financial market tensions and the deceleration of global economic growth. nevertheless, we cannot be complacent, as risks to euro area growth remain on the downside. an important and relevant question is whether the ongoing process of de - leveraging and reintermediation and the impact of the financial market turmoil on banks ’ balance sheets are likely to lead to a credit crunch. the evidence so far is reassuring. on the basis of the available data, there have been no signs of a credit crunch or even indications of a deceleration in the rate of loan credit growth to the private sector which has remained strong, in particular the pace of credit expansion to non - financial corporations. it is, of course, true that we have witnessed a tightening of financing conditions and credit standards in the euro