anthrax incidents will determine the level of confidence among consumers and businesses in the coming months. part of the current uncertainty lies in the fact that indicators refer to the period before the watershed date 11 september. this portion of uncertainty will recede as ever more figures cover the post - attack period. in the euro area, economic growth is currently significantly below potential. the economy grew by only half a per cent in the first quarter and stagnated in the second quarter. business and consumer confidence had been falling even before 11 september and the reduction in unemployment has come to a halt at 8. 3 percent. the return to the presumed potential growth path of 2½ percent a year will be delayed. there are, however, a couple of reasons to remain optimistic for the economic prospects of the euro area in the medium term. the expansionary effects of this year ’ s interest rate cuts are still in the pipeline. it takes some quarters for interest rate measures to start affecting the real economy. in addition, low real interest rates make for favourable financing conditions throughout the euro area. increased use of information and communication technology will bolster potential growth. in this respect, the euro area is in a rather favourable position. a major portion of potential productivity gains of it investment are yet to be realised. heavy overinvestment in it had been avoided in the euro area. definitely good news is on the price front. inflation in the euro area has been falling since reaching its peak in may [ 3. 4 % ]. in september, consumer prices were 2. 5 percent higher than in the previous year [ august 2. 8 % ]. early indicators such as producer prices and the prospected german inflation rate in october [ 2. 0 % ] point to a further fall in inflation in the near future. monetary policymakers in the eurosystem have lowered official interest rates during the course of this year by 100 basis points, acknowledging lower price pressure over the medium term. the eurosystem ’ s monetary policy measures are tailored to the medium - term outlook for price stability. if, in the governing council of the ecb, we see the possibility of reducing interest rates further without compromising price stability, we will do so. for fiscal policy, it is of the utmost importance that the current situation be assessed in a realistic manner and that the instruments available are applied carefully. activism and excessive zeal are perfectly understandable - but detrimental. the appropriate stance for fiscal policy now is to make use of built -

means of payment, the demand for cash continues to grow. the objective of our currency function is to provide canadians with bank notes that are readily accepted and secure against counterfeiting. in fact, we quantified this goal as fewer than 100 counterfeit notes detected annually per million notes in circulation, and we are now meeting this standard. but we intend to make further progress, and our new goal is fewer than 50 counterfeits detected annually per million notes in circulation. for some time, the bank has been developing canada's next bank note series, which we expect to start issuing in late 2011. planning for a new series of bank notes is a complex job, and so necessitates taking a long view. our anti - counterfeiting strategy is also a long - term proposition. it contains four elements. the first is to develop bank notes that are ever - more difficult to counterfeit. the second is to increase the routine verification of bank notes by retailers – our regional staff play an important role here by helping in the training of retailers and cash handlers. the third element of the strategy is to maintain the high quality of bank notes in circulation. and the fourth is to promote the deterrence of counterfeiting by lawenforcement officers and prosecutors. regional staff also play key roles in supporting these last two elements of the strategy by liaising with financial institutions and with lawenforcement agencies. as part of its deterrence work, the bank has established an annual " law enforcement award of excellence for counterfeit deterrence. " this year, the award was presented in charlottetown to the rcmp's national anti - counterfeiting bureau during the conference of the canadian association of chiefs of police. transparency is also important in our currency work. in addition to reporting on the incidence of counterfeiting vis - a - vis our targets, we communicate regularly with the public and retailers about the security features in our bank notes, and we publish the costs of the currency program in our annual report. as to keeping the big picture in mind – well, currency is only one of several means of payment. the bank conducts research on the factors that influence choices in means of payment, and we monitor trends. this helps us to understand the role of bank notes in transactions, and to forecast demand. i'll now say a few words about the bank's second area of responsibility : funds management. funds management the bank of canada is the federal government's banker