practices, and infrastructures. the euro has made an impressive debut on the global stage. to a significant extent, this situation reflects the credibility credentials earned by the ecb in its first several years of existence. it also reflects the perceptions of market participants of the euro area as an economy with strong growth potential. determined efforts in the remaining areas i have discussed would fulfil these perce3ptions and add to the attractiveness of the euro in the international arena, allowing it to seriously challenge the hegemonic role now played by the us dollar. ladies and gentlemen, thank you for your attention.

the coming year is mainly based on the projected evolution of internal demand. which effect is stronger - the impact of higher short - term rates on growth, or the beneficial effects of low long - term rates? well, it depends of course on the term - structure of debt and the proportion of long - term debt with variable rates. but the general point that i would like to emphasise is that although a higher level of short term rates can be expected to dampen growth in principle, it may not dampen growth in practice because of the influence of other factors, including those that determine the functioning of labour markets and productivity growth. could it be that the recent move by the ecb represents a case where increase interest rates might stimulate growth? i would agree with this. public perceptions and expectations of future inflation should be favourably influenced by a change in the monetary policy stance that aims at preserving price stability. it [ a higher level of interest rates ] could foster expectations of lower inflation and higher real disposable incomes, and increase confidence, particularly in countries where public perceptions of current inflation are less favourable than actual inflation and financial markets ’ inflation expectations. [ so ] you expect the adjustment to higher interest rates to be orderly? your question suggests that it is a certainty that higher interest rates are coming. i think that we have clarified that we have not decided, ex - ante, to engage in a series of interest rate increases. so i will answer the question in a general way, as a hypothetical question on whether an evolution of interest rates towards a higher level will be orderly? as far as policy rates [ set by central banks ] are concerned, it is important that any future changes are well understood by the markets and the public and are predictable. as regards changes in market rates, particularly potential adjustments in long - term rates partly in response to a change in the monetary policy stance, i would say that the likely scenario would be one of an orderly adjustment, although the relationships between long - term and short - term rates are complex. although there is a risk of an abrupt correction in the level of long - term interest rates as a result of the impact of other developments, this is not the likely outcome on the basis of currently available information. is there a risk of house price bubbles bursting? it is always difficult to identify whether property price rises are indicative of a bubble because property prices are influenced by changes in fundamentals as well as by speculative behaviour. we know that in a number of