should not amplify economic fluctuations. structural reform as i said, structural reform is ultimately the responsibility of individual economies. the crisis has reduced some of the imbalances almost automatically. in the euro area, economies with wide current account imbalances – including spain – have suffered relatively more than others. as a consequence, output and employment losses in these countries are acting as potent stabilisers to re - absorb long - standing gaps between domestic savings and domestic investment. as miguel fernandez - ordonez has said, some structural weaknesses have been revealed even more clearly and call for appropriate reforms. spain was on a pattern of growth in the run - up to the crisis that was not sustainable. before the decline, the housing market had seen an important boom fuelled by expected future higher earnings, an important inflow of migrants and low financing costs. the buoyancy of aggregate demand, in turn, supported a wage - setting environment that did not correspond to the underlying gains in productivity. in the future, changes in labour market institutions to make wages adjust to productivity are essential to repairing past cumulative misalignments. there is a need for moderation in wage claims to regain competitiveness. this window of opportunity cannot be missed in those countries where substantial increases of production costs have been one of the causes for widening imbalances in current accounts, and spain is one of them. in this country, the burden of the crisis has fallen disproportionately on temporary workers. compensation for those employed on a permanent basis has seen only minor adjustments. looking into the future, wage flexibility will need to be made more widespread. at the same time the main asset for growth and development in our societies is human capital. incentives need to be shaped to maintain and develop knowledge by each individual and – collectively – by companies and institutions. this includes training and investment into the workforce, supported by well - designed employment contracts. reforms in services, can further support the recovery and contain price increases once private expenditure recovers. in the end, these reforms, by increasing productivity and competitiveness help rebalance the external accounts on a permanent basis and reduce the reliance on external financing. needless to say, the complexity of the international financial crisis and the synchronised weakening of the real economy have put banks in a complex and exceptional position. in the short - term, with the economic slump and the high levels of unemployment, non - performing loans will be on the rise. and pressure on banks ’ balance

and realistic fiscal exit strategies and for fiscal consolidation. some countries are in a relatively favourable position because their past management was wise and prudent, while others are already very close to losing credibility. spain – where fiscal consolidation had progressed more than elsewhere – will have to make sure that it keeps its fiscal credibility in the years to come in strictly meeting the requirements of the stability and growth pact. a clear plan for a medium - term fiscal correction becomes even more pressing for rapidly ageing societies like ours, as an increasing numbers of pensioners will mean mounting claims on public transfers. iv. conclusion more than one year after the dramatic deepening of the financial crisis in september 2008, we can spot a number of signs of economic stabilisation in the euro area. we have halted the freefall in economic activity that we witnessed over a period lasting more than six months after the intensification of the crisis in mid - september 2008. but the crisis has debilitated the real economy. as i said, the crisis has proved so deep because it has deprived our citizens of confidence. every business activity is by its very nature an act of trust, an expression of confidence. as regards bankers, by granting loans more actively to entrepreneurs they can contribute to transmitting and inspiring confidence to the economy at large. being part of the euro area and the european union will help in this process. for what concerns the ecb and the entire eurosystem team, with banco de espana as a very active member of the team, our 330 million fellow citizens in the euro area ask that we continue to deliver price stability over the medium term, in line with our definition – less than 2 % but close to 2 %. our determination to anchor solidly inflation expectations has served us well since the introduction of the euro, including in the recent period of crisis, by helping to avoid the materialisation of the risk of deflation. the euro area can count on us to continue to be a solid anchor of stability and confidence in these challenging times. thank you for your attention.