euro area, concentrating firmly on euro area countries experiencing sustained losses of competitiveness and large current account deficits as these countries face the greatest sustainability challenges. it should be determined by transparent and effective trigger mechanisms and specify clearly the sanctions in case of breach. and we need full transparency. the assessments of macroeconomic imbalances and recommendations for corrective action should be given broad publicity at all stages of the surveillance process. … with a special focus on financial surveillance. and finally, the financial crisis has taught us that economic growth can be severely impacted by financial market disruptions. for this reason, european leaders agreed on a new financial supervisory architecture for the eu aiming to prevent financial disruptions of the kind that we have been experiencing in the future. this new financial supervisory architecture, which will become operational as of 1 january 2011, includes the three new european supervisory authorities ( esas ) for banking, insurance and securities markets to enhance microprudential supervision and the european systemic risk board ( esrb ) as the new macroprudential supervisory body in the eu. the ecb will provide the secretariat to the esrb. the assignment to the ecb of specific tasks concerning the functioning of the esrb is welcome, but does not constitute a change in the mandate or an additional objective for monetary policy. rather, these tasks should contribute to financial stability, while being fully in line with the ecb ’ s primary objective of maintaining price stability. there are clear lines of institutional separation between the ecb and the esrb. in particular, both institutions are independent and have separate, clearly defined mandates, namely the maintenance of price stability in the case of the ecb and the mitigation of systemic risk in that of the esrb. see the ecb proposals on “ reforming economic governance in the euro area ”, which president trichet submitted to the van rompuy task force on behalf of the governing council on 15 june 2010.

are improving. conditions in the euro area money markets are improving. the volumes in the interbank money market ( eonia ) have virtually doubled since summer, and are now back to the levels prevailing before august 2007. the overall reduction in central bank liquidity has brought the interbank ( eonia ) rate closer to the policy rate, which is an important step towards going back to our pre - crisis framework. euro area activity recovered in the second quarter of 2010 … economic activity in the euro area is recovering. according to eurostat ’ s flash estimate, gdp grew by 0. 4 %, quarter on quarter, in the third quarter of 2010, after increasing by 1. 0 % in the second quarter. while no breakdown is available for the third quarter of 2010, all components contributed positively to quarterly gdp growth in the second quarter. in particular, domestic demand contributed quite strongly for the first time since the crisis, namely by 0. 5 percentage point. … and surveys point to ongoing growth into the fourth quarter. looking beyond the third quarter, survey indicators, such as the purchasing managers ’ index ( pmi ) and european commission business surveys for the manufacturing and the services sectors, point to ongoing growth in october. consumer confidence increased in october and stood above its long - term average, pointing to a gradual recovery in euro area consumption. good prospects for households ’ income from the stabilisation in the labour markets … the sentiment in the survey data finds its support in a number of encouraging developments, both in the household and in the non - financial corporations sector. on the household side, labour markets are stabilising, with employment levels remaining stable in the first and the second quarters of 2010, while hours worked increased by 0. 2 %, quarter on quarter, in both these quarters. the effect of the crisis on hours worked was far stronger than that on the number of persons employed. therefore, the upturn has also been stronger in terms of the hours worked. moreover, the unemployment rate has stabilised in the last few months and stood at 10. 0 % in the third quarter of 2010. overall, the stabilisation in the labour markets is creating good prospects for household income and, thereby, also for private consumption. indeed, the breakdown of households ’ income shows that the share of compensation of employees has increased recently, while the contribution of net social benefits has declined. … and upward trend in production and new orders. as to non - financial corporations, we can observe an increasing improvement