fact that a small number of euro area countries recorded zero or negative gdp growth in the first or the second quarter of 2008. 3. according to available projections, while some downward revision during the next two months cannot be excluded, growth rates should remain positive in 2008, of the order of 1. 5 - 2. 1 % in the euro area and 3. 4 - 3. 5 % in greece. in both cases, exports and domestic demand will remain the main drivers of growth, although their contribution to growth will be smaller than in 2007. however, in spite of the shocks experienced during the last twelve months, the economic fundamentals of the euro area as a whole remain sound. 4. as far as greece is concerned, the adverse international environment makes it imperative to intensify, rather than simply not relax, efforts to address the macroeconomic imbalances and structural weaknesses which are reflected in : - the large current account deficit ; - the still high public debt - to - gdp ratio ; - the persistent inflation differential vis - a - vis the euro area as a whole ; and - the unemployment rate, which despite its decline remains relatively high. the increase in the world prices of oil and food commodities this increase presents a major, but not unprecedented, challenge. this time we have to deal with the challenge in a correct and, above all, timely manner, ensuring that it does not trigger a second round of endogenous, broadly - based inflationary pressures. targeted relief of economically weaker groups must be prioritised. this will require a brave effort from all parties involved, enterprises and households alike, to adapt to the new conditions. we must not repeat the painful mistakes of the past. 1. adding to the credit - related macroeconomic uncertainties are those that arise from the possibility of further increases in the world prices of oil and other raw materials as well as food. 2. all of us, i. e. policy makers and social partners, have a duty to make sure that the fundamentals of the greek economy improve and that heightened macroeconomic risks do not materialise. as our economy now faces the effects of exogenous and to some extent temporary shocks, it is of the utmost importance to ensure that the adverse effects of domestic factors – i. e. the macroeconomic imbalances and structural weaknesses that i mentioned earlier – on our medium - term prospects of output, employment and incomes are contained. should we fail, hard times for all of us will last longer

bonds stay low. by investing cash from maturing bonds into bonds with a maturity of, say, at least ten years, such an operation twist could be potentially useful during the reinvestment period, since it can be used as a vehicle for differential stimulus across countries. this fine - tuning of the maturity of assets is nothing unprecedented. in 1961, the fed sold shortterm t - bills and replaced them with longer - dated government bonds, while in the period between september 2011 and december 2012, the fed replaced $ 667 billion in securities with maturities below three years with longer - dated assets. in terms of challenges ahead, beyond the reinvestment period i. e. beyond 2020, let me focus on a pivotal issue. question : is there an optimal central bank ’ s balance sheet size? an important issue is how long it will take for the ecb to reduce the balance sheet to its original – or another predetermined – level. my personal view is that there is no need for the ecb to rush to reduce the size of its balance sheet, as one needs to take into account the uncertainty created among market participants and to avoid any potential market disruptions. there are other ( conventional ) tools to use if tightening is deemed necessary, including : raising interest rates even with a large balance sheet, increasing reserve requirements, using reverse repo operations to drain excess liquidity. what is important is to make sure predictability is safeguarded by presenting a normalisation sequencing roadmap, which allows the balance sheet to shrink passively by holding the assets purchased to maturity. there are pros and cons of a large central bank balance sheet ( from the standard monetarist argument that points to excess liquidity originating a rapid inflation to financial stability considerations ). no matter what this optimal size is, it is important for the central bank to communicate with the markets what will be the new ‘ normal ’ balance sheet size. in other words, central banks should define clearly the framework, in which they intend to implement monetary policy at the end of the normalisation period. let me now briefly turn to developments in and prospects for financial markets. b. global markets our research and financial operations department and the asset management committee, which i chair, at the bank in athens, share the widely held view that the us dollar will remain strong in the months ahead [ by midyear about 6 % above its low point against other currencies in february ], vis - a - vis