of risks to the short term global outlook remains tilted to the downside. at the same time, inflation has increased around the world, boosted by the continuing buoyancy of food and energy prices. in this environment, the greatest contribution that central banks can make is the firm anchoring of medium to longer term inflation expectations. looking ahead, a key challenge – especially in the u. s. where most of the financial sector losses are concentrated – will be to ensure that systemically - important financial institutions expeditiously repair their balance sheets, by raising equity and medium - term funds, in order to boost confidence and avoid a contraction of credit. this will help avert a spiral of declining asset values, balance sheet losses, reduced lending and damage to the real economy. policy makers will need to address systemic vulnerabilities in ways that minimize moral hazard and fiscal costs. meanwhile work is being done, in international institutions and fora – such the imf and the financial stability forum – to analyze the causes of the financial market turmoil and propose policy directions to strengthen financial resilience. the growth of bank loans to the domestic private sector has remained robust in recent months and, importantly, this has not been driven by an involuntary increase in banks ’ balance sheets, according to the ecb staff ’ s preliminary analysis. in sum, the present financial market turmoil contains lessons for both market participants and policy makers. risks and uncertainties are an inherent part of economic progress. indeed, as the great economist joseph schumpeter, wrote in the first half of the twentieth century, risks and uncertainties are basic to the process of what he called “ creative destruction ” through which innovations and economic progress are made. by learning to better manage these risks and uncertainties we can ensure that we will be able to realize the full benefits of globalization, that is, enhance prosperity for all our citizens. let me conclude by saying that the icc has provided a valuable forum for the exchange of ideas on the benefits and challenges of globalization. this meeting is taking place at a particularly challenging time for global financial markets. i very much hope that the surroundings in athens will provide inspiration for an especially successful meeting. ladies and gentlemen, thank you for your attention.

largest eu banks ; furthermore the first greek bank moved from its 78th place before 2000 up to the 63rd place. the bank of greece, for its part, has been continuously encouraging both the creation of larger and more efficient financial institutions through m & as as well as greater foreign presence in the greek financial market. its aim is to strengthen competitive forces, encouraging banks to adopt best practices and modern management techniques, introduce new bank products and lower the cost of borrowing. this, together with the rapid expansion of the greek banking sector abroad, should help to gradually establish athens as a regional financial hub. this is, i think, a realistic goal but it does have some prerequisites : greek banks for their part need to accelerate their process of modernization, especially by rapidly expanding the use of low cost electronic means of payments, and increasing the offer of sophisticated bank products, while improving their risk management techniques in line with basel ii. in the course of 2006 the key driver of structural developments has been the full or partial privatization of state - controlled institutions. emporiki bank was acquired by credit agricole, while the postal savings bank was granted a banking license in conjunction with an initial public offering ( ipo ) on the athens stock exchange. in the last 10 years, the national bank of greece has been gradually cutting loose from state control. to this end, the appointment of professional managers and the last capital increase, which led to a dilution of the state ’ s shareholding, have been decisive factors. as a result, the share of directly state - controlled institutions declined further to about 13 % of total banking system assets from about 80 % some 10 - 12 years ago. these developments are expected to further enhance competition to the benefit of the greek consumer. concurrently, the consolidation among private medium - sized banks continued. marfin popular bank is emerging as an important player, after the participation of dubai financial in its share capital and the planned triple merger between marfin bank, egnatia bank and laiki bank ( cyprus ). proton, which is focused on investment banking, is also acquiring a retail bank to expand into retail banking activities. greece, at present, is primarily a retail banking market ; but, gradually, as greek banks ’ networks abroad increase, greek banks will also serve the growing number of greek multinational firms both in their domestic activities and abroad. thus the shift towards wholesale and investment banking is expected to gather strength. competition is rather intense and a variety of new products are entering