are closely monitored by the ecb in terms of our economic analysis. within this context, while we take the euro area real estate sector into account in assessing risks to price stability, we certainly do not target house prices, or for that matter, any other asset prices. we do monitor asset prices closely because of the potentially high costs for price stability and for the economy as a whole that are associated with strong appreciations and rapid reversals in asset prices. also, our monetary analysis covers the monitoring of money and credit which often reflect the evolution of prices and house purchases. in this sense, a strategy which on top of our economic analysis regularly assesses money and credit developments has an important benefit on the monitoring side in that it can contribute to identifying and limiting the emergence of unsustainable developments in asset prices. in terms of recent developments in the euro area real estate sector, the latest available data on house prices appears to support the notion of a cooling in euro area housing market developments after a prolonged period of unusually high growth rates in many euro area countries. that said, house price growth generally remains relatively buoyant in the euro area on average when seen in historical perspective – notwithstanding considerable heterogeneity in underlying country developments. the outlook for the euro area as a whole remains that of a soft landing, as price increases moderate gradually and further developments evolve in line with fundamentals. within this context, a continued moderation of residential investment would also be likely. the above economic assessment is complemented by information from our monetary assessment, in particular that the annual growth rate of loans to households was in october at 6. 8 %, from 7. 0 % in the third quarter and 7. 5 % in the second quarter. in this sense, there is no indication that the financial market turmoil has, as yet, limited lending to households, the moderation of which started as long ago as the second quarter of 2006. i am now at your disposal for questions.

factors of the financial stress, and in order to re - establish confidence within the financial system, it is crucial to promote a widespread consistent valuation of complex structured products as well as an adequate disclosure by banks of their exposures, in particular related to the us subprime mortgage sector. second, i would welcome the efforts of the supervisory community, namely through the basel committee on banking supervision and the committee of european banking supervisors, in keeping each other abreast of developments and in considering jointly possible measures to contain the potential effects of the turmoil. third, i would underline the importance in stress situations, like the current one, of effective and smooth cooperation and exchange of information between the supervisory authorities and central banks. as to the policy lessons to be learned in order to avoid the recurrence of similar disruptions in the future, i would say that, while it is still early to draw firm conclusions, there is a common understanding on the key issues requiring further analysis. in this respect, let me recall a few topics. first, the need for the financial industry to provide more public information about securitisation, credit risk transfer and complex structured products. second, the need for rating agencies to review their methodologies for complex structured products and to address very seriously potential conflicts of interest. third, the need for investors to review their investment behaviour excessively reliant on ratings. fourth, the need for supervisors to implement the new capital framework under basel ii as rapidly and effectively as possible and to reflect on possible improvements of the framework, including the enhancements of the supervisory regime for liquidity risk. in this context, i should mention that the ecb with the assistance of the banking supervision committee is carrying out work on banks ’ stresstesting and contingency funding plans. on all the issues mentioned above, work is already under way at both the international and european level. the ecb is strongly supportive of the work of the financial stability forum, as well as of the european initiatives discussed in the ecofin council. in this context, i would like to once again stress the importance of effective cooperation in any policy actions to be taken at the international level. the impact of globalisation on price developments ladies and gentlemen, let me turn to the impact of globalisation on price developments. as a preface, let me say that while globalisation could influence aggregate prices in several ways, such impacts are limited to the short term given that inflation is ultimately a monetary phenomenon. the direct, and