playing its role by implementing structural reforms and contributing to a rebalancing of growth. ” for the first time in its existence the euro area outpaced the united states in terms of economic growth. the euro area ’ s seasonally adjusted jobless rate came to 6. 9 % in 2006, thus hitting its lowest level in more than a decade. this drop is not only the result of economic activity. the labor market and welfare reforms of the past few years have also reduced structural unemployment. since the introduction of the euro in 1999, some 15 million new jobs have been created in the euro area. this is not to depict an unduly positive picture. the inflation rate for october came to 2. 6 % after being below the 2 % mark for a year. the outlook for price stability over the medium term is subject to upside risks as increased oil, commodity and food prices as well as the favorable labor market situation are likely to make higher wage settlements possible. nevertheless, there are signs that the competitive position of the euro area has improved. since 2002, productivity growth has contributed considerably to falling unit labor costs in the euro area. also, the shock resilience of the euro area seems to have improved owing to the “ stability architecture ” of the eurosystem. this architecture rests on three pillars : a stabilityoriented monetary policy, sustainable public finances, and growth - and competition - oriented structural policies. as for the third pillar, the lisbon strategy adopted in 2000 with the aim of creating a modern and competitive economy seems to be finally bearing fruits. however, the observed persistent divergences in unit labor cost growth and inflation in a number of euro area countries clearly point to increasing risks of further competitive losses and potentially costly real economic adjustment. since the single monetary policy cannot address inflation divergences in individual countries, it is evident that structural reforms, wage - setting processes and budgetary policies must contribute to reverse competitiveness losses in individual euro area countries. if the lessons from success stories both within and outside the euro area are applied elsewhere, the euro area as a whole will emerge as a stronger and more dynamic economy. on january 1, 2008, cyprus and malta are going to adopt the euro. let me offer my warm congratulations to governor orphanides and governor bonello for reaching this milestone. you can be proud of your countries ’ successful convergence process. looking ahead, the adoption of the euro will allow you to reap all the benefits of the common currency and enhance your integration

of the rba and the payments system board. 1 at the broadest level, this mandate is to help shape the payments system so that it works in the best interests of australian households and businesses. our north star is promoting the public interest. we strive to achieve this through a combination of suasion, regulation and working with industry participants to help overcome the coordination issues that can bedevil payment systems. in seeking to promote efficiency, competition and safety in the payments system, we also recognise the important role of innovation in serving the public interest. australia ’ s productivity growth challenges make this all the more pertinent. one can think of the new payments platform ( npp ) as a notable example of this focus ( graph 2 ). more recently, this year the rba materially raised the activity threshold beyond which securities settlement facilities must comply with the financial stability standards. it was assessed that the higher threshold struck a more appropriate balance between the public interest in the management of financial stability risks, and the public interest in avoiding excessive regulatory burden ( particularly on small enterprises ). and as i will discuss later, we also recently launched a new project with industry to examine how central bank digital currency, stablecoins and tokenised bank deposits could, along with new infrastructure arrangements, support innovation and resilience in wholesale tokenised asset markets. r e s e r v e b a n k o f au s t r a l i a graph 2 where innovation promises to not only enhance efficiency but also resilience and safety in our financial system, all the better. this recognises that we are entering a new era for operational risk – a result of rising geopolitical tension and other sources of potential disruption that include third - party vendors. for these reasons, strengthening resilience in our payment system and our financial market infrastructure is a key area of focus for the rba in its work with other member agencies on the council of financial regulators. 2 this aside, the rba is also working with the government to make sure that australia ’ s regulatory architecture is fit for purpose in the 21st century. this is a pressing issue given the foundational legislation setting out the rba ’ s powers was drafted in another era – one prior to the emergence of the digital economy that will be essential to australia ’ s future prosperity. if there is one message to takeaway from my remarks today, it is this – while we should recognise that australia has a world class payments system today, it would