of financial stability matters, should further enhance the regulatory system which already is highly regarded internationally. if we look back only to 1990, the central bank ’ s regulatory responsibility extended to some 50 credit institutions. over a dozen years, this responsibility has grown to cover almost 3000 diverse financial entities and a further 3000 collective investment schemes. the new bill will add further to these numbers. this will pose additional challenges for the bank and indeed for me personally. i am looking forward to overseeing the successful implementation of the new legislation and to working with all interested parties to ensure that we achieve the best possible outcome. if my first four weeks in office are anything to go by, i can expect a very interesting and challenging period as governor of the central bank. during my time as governor, i also hope to get to know a lot of you better than i do today. thank you for your attention.

##turn in the housing market and the consequent reduced employment in that sector will contribute to a sharp slowdown in the overall rate of job creation and a rise in the unemployment rate to about 6 per cent on average this year. although the weakness in economic activity is being reflected in some moderation in domestic inflationary pressures, ireland, in common with other developed economies, is facing significant inflationary pressures arising from very elevated levels of energy and other commodity prices. residential housing market the housing market weakened significantly during 2007 with sharp declines in both output and prices. an adjustment in the housing market had been envisaged by most economic commentators since housing output was well above the sustainable rate taking account of underlying housing needs for a number of years. housing investment peaked at around 13 per cent of gdp in 2006, which was well in excess of international norms. this is likely to reduce to about 7½ per cent of gdp in 2008, which represents a very substantial scaling back of activity. the significant weakening in the housing sector is going to detract considerably from growth this year. housing output should broadly stabilise during the course of next year, but clearly risks are to the downside. in general, however, the declines in both output and prices represent a movement towards a more sustainable position in the long term. unfortunately the adjustment process is a difficult, if unavoidable, one. international economy there are two fairly distinct sets of events driving developments in the global economy at the moment. firstly, there are housing market adjustments in the major economies and the associated difficulties in international financial markets and, secondly, the more recent sharp increases in food and energy prices. as a result, growth in the global economy has slowed while inflation has picked up. unfortunately we are more exposed than most to countries, like the us and the uk, where the slowdown in growth has been particularly marked and where changes in the exchange rate raise competitiveness problems. the us economy experienced a significant slowdown in the final months of 2007 and economic activity remained subdued in the first half of 2008. over the past year, growth has also slowed noticeably in the uk economy. economic activity in the euro area has remained stronger, but an easing in the growth rate is expected in the next few quarters before a recovery towards its potential growth rate. the risks to the growth outlook are, however, on the downside in our main trading partners. more recently, the sharp rise in energy and commodity prices has added to the challenging situation,