assistance programme will only be sustainable if there are structural changes that foster higher potential growth. over the recent past, portuguese per capita gdp has remained 30 – 40 % below the european union average, without converging towards the richest economies. a lasting trajectory of growth and convergence towards our european partners depends on our ability : to promote efficient resource allocation, namely through sustained maximisation of investment returns, and reallocation towards the tradable sector ; to reach higher levels of productivity ; to generate and maintain high levels of employment ; and to ensure that the combination of capital and labour generates an output that is desired and valued by the market. public policy has a key role to play by upholding continued structural reforms that will, inter alia, help : increase aggregate savings in the economy ; strengthen firms ’ capitalisation ; provide, through capital markets, adequate instruments to finance innovation and exports ; promote regulatory and tax predictability and, more generally, a business - friendly legal framework ; the separation between firm ownership and firm management ; red tape reduction ; and a better functioning of the judicial system. such reforms are, on the one hand, imperative for pursuing the correction of the macroeconomic imbalances that led portugal to the past crises and, on the other hand, extremely hard to 5 / 6 bis central bankers'speeches implement after the conclusion of the assistance programme. why do i say that structural reforms are extremely hard to implement in the current context? let me highlight three critical challenges. 1. first, in the current context of strong global competition, firms need to adapt permanently to the fast - changing competition, requiring accordingly adaptable support services by the state. this means that we need a state that is lean and efficient, while being able to safeguard social cohesion at the same time. 2. second, transferring resources towards the tradable sector is crucial for avoiding a return to external imbalances, but may jeopardise social cohesion. indeed, adapting to competition is always challenging and there are losers in this process. these situations have to be supported by sustainable social safety nets. 3. finally, in the absence of a sense of emergency, of imminent financial market pressure and of money illusion, reform ownership by policymakers and social consensus become much harder. the costs from each reform become clearer and must be carefully balanced by perceived offsetting benefits. the nature of these challenges transcends pure economic models, encompassing social equilibria. overcoming them requires, thus, social and political

actions as they continue are demanding the saving public and those on fixed incomes subsidize the borrowing public. to summarize, i am pleased to be able to say that in my view the economy is in recovery, although at a moderate pace. over time, barring unexpected surprises, the recovery should gain momentum, which will encourage hiring and slowly bring down the unemployment rate. while we would all like to see the unemployment rate come down more quickly, and in fact should gain momentum, we must also acknowledge that our economy is adjusting to decades of excess consumption, high government debt and spending, and a low domestic savings level. these factors must also adjust, and this will take time as well. the very fact that we are in what appears to be a sustained recovery speaks well of our economy and its flexibility to adjust and regain strength over time. dissent and monetary policy deliberations my view of the economy ’ s prospects and the appropriate stance of monetary policy differ from the majority view among my federal reserve colleagues. last year, i was a voting member of the federal open market committee. reserve bank presidents vote in rotation, so i will be a participant rather than a voting member this year. it is a matter of public record that i dissented, or cast a “ no ” vote in all eight meetings in 2010. based on audience questions, news coverage and pundit columns throughout the year, it has become obvious to me that the role of dissent in the fomc is misunderstood and viewed without context. the idea that a dissenting vote is confusing, counterproductive, and generally undesirable is unhealthy. it is also historically inaccurate. in my remaining time today, i will discuss why dissenting views at the fomc are critical to the success of the federal reserve system and that public debate was the intent of its congressional founders. i will also describe how open debate and dissent are fundamental to achieving transparency of fomc deliberations and to supporting the credibility of the committee in difficult economic times. history when the congress created the federal reserve nearly a century ago, it believed very strongly that the best policy is not made in isolation, but encompasses a wide range of views from all affected interests. a federal reserve bank was established in kansas city, as well as 11 other major cities across the united states, to make sure the views of communities nationwide had a voice in federal reserve policy. the founders knew that such broad - based participation would lead to better