jean - claude trichet : structural reforms in the euro area speech by mr jean - claude trichet, president of the european central bank, at the council on foreign relations, new york, 24 april 2006. * * * it ’ s a pleasure for me to be here at the invitation of the council on foreign relations to share with you my views particularly on structural reforms in the euro area. economic performance of the euro area let me start with a brief assessment of the euro area ’ s economic performance by recalling a few facts. over the last years the euro area witnessed an improvement in the utilisation of labour, which increased on average by 0. 2 % per year between 2000 and 2004. 1 this mainly reflects the rise in the euro area employment rate from 61. 5 % in 2000 to 63. 6 % in 2005 2, being accompanied by a significant decline in the aggregate unemployment rate from 10. 5 % to 8. 6 % 3. remarkably, employment growth in the euro area showed resilience to the economic slowdown at the beginning of this decade, with employment growing on average by 1. 1 % over the period 2000 - 2005, compared to 0. 9 % in the us. 4 however, the employment rate in the euro area remains low by international standards – for example, the employment rate was 71. 2 % in the us in 2004 5 – and the unemployment rate is still much too high – compared with, for example, the unemployment rate of about 5. 0 % in the us in 2005 6. furthermore, since the launch in 2000 of the lisbon strategy - a comprehensive agenda of structural reforms aimed at profoundly transforming the eu - the annual growth rate for the euro area has averaged 1. 8 % per year 7 ( compared to 2. 8 % in the us ), thus remaining somewhat behind its main competitors. when comparing the euro area economic performance to the us, there is evidence of increasing disparities in growth. since the beginning of the 1990s, the gap in per capita income growth between the us and the euro area has continuously widened - by 0. 8 % on average per year during the 1990s, increasing to 1. 3 % per year from 2002 onward 8. the main explanatory factor behind these developments is the diverging trend in hourly labour productivity growth between the euro area and the us. during the 1980s hourly labour productivity growth was increasing at an annual rate of 2, 5 % in europe as compared to 1, 3 % in the

risk and uncertainty in the financial markets, particularly visible during the recent financial crisis. financial market infrastructures ( fmis ) have stood the test of time by settling obligations whenever they were due and provided market participants enormous confidence to transact business without the risk of defaults and failures during periods of uncertainty and volatility. nevertheless, the need for sound risk management and governance with focus on areas like liquidity and credit risks has been realized by all the stakeholders and this has acted as the driving force behind the initiatives to review the existing standards as a part of crisis proofing exercise. principles for financial market infrastructure ( pfmi ) are part of such initiatives. pfmi is meant for the financial market infrastructure ( fmis ) like systemically important payment systems ( sips ), central securities depositories ( csds ), securities settlement systems ( ssss ), central counter parties ( ccps ) and trade repositories ( trs ) ( newly included ) which facilitate the recording, checking and settlement of financial transactions. the cpss and iosco have published new pfmi replacing their previous principles and standards viz. ( i ) core principles for systemically important payment systems ( cpsips ) ( 2001 ), ( ii ) recommendations for securities settlement systems ( rsss ) ( 2001 ) and ( iii ) recommendations for central counterparties ( rccp ) ( 2004 ). bis central bankers ’ speeches these 24 principles ( pfmi / 2011 ) which have come in place of the existing standards include new features like ( i ) default handling of clearing participants ; ( ii ) addressing of operational risk ; ( iii ) principles on segregation and portability ; ( iv ) tired participation and ( v ) handling of business risk. the new principles in essence reflect the learnings from the recent financial crisis. along with these principles five responsibilities have been assigned to the regulators. they are : i. fmis should be subject to appropriate regulation, supervision and oversight by the central bank, market regulator or other relevant authority ; ii. these authorities should have the powers and resources to carry out their responsibilities in regulating, supervising and overseeing fmis ; iii. authorities should clearly define and disclose their regulations, supervisory & oversight policies with respect to fmis ; iv. authorities should adopt the relevant internationally accepted principles for fmis and apply them consistently ; and v. authorities should cooperate with each other, both domestically and internationally in promoting the safety and efficiency of fmis. as we observe, the focus of the