pessimism is one of them and has permeated many economic circles and is in itself a worrying phenomenon. this is reflected in the fact that the recent recovery, instead of being compared to stronger previous cyclical recoveries, is compared to the worst phases of the cycle - the declining output towards the end of 2002 and the first half of 2003. in the same vein, a very low potential rate of growth of barely above 2 % per year for the euroarea is considered by many as a normal benchmark against which outcomes are measured. therefore, a 0, 5 % shortfall, i. e. a rate of growth in the euroarea of about 1. 5 % as is projected for 2004, is implicitly considered broadly satisfactory, despite the fact that there is still a negative output gap. given the interaction between actual gdp growth and potential growth, a sharper rebound of the euroarea, as was the case in cyclical upturns in the past, would by itself have raised the rate of growth of potential gdp. indeed, if assisted by bold structural reforms the rate of growth of potential in the euroarea could be raised to over 2. 5 %, the same rate as in the 1980s and a rate more normal for mature economies. the potential rate of growth of the us has averaged just over 3 % over the last twenty five years. if too much pessimism regarding the potential rate of growth dampens actual growth and, therefore, may to some extent be self - fulfilling, equally dangerous is over - optimism, or better ( to use the famous words ) irrational exuberance, that is quickly disproven. what is needed is a sober assessment of the situation and the introduction urgently of appropriate structural reforms, so that not only macro - but also micro economic policies are geared to supporting a stronger non - inflationary growth than today. though the cause of to - day ’ s ills in the euroarea are essentially of domestic origin, i hinted earlier that exchange rate policies followed by certain heavy weights in international trade have resulted in a real effective appreciation of the euro more than is warranted and, moreover, it seems that from a dynamic point of view the appreciation is much greater than the published figures show, which are necessarily based on past data. as a result, whereas the euroarea, one of the richest regions of the globe should have had a sizeable current account surplus so as to fulfill its natural world role as

and no one did before the fact – the rise in inflation that followed. nevertheless, we have managed to chart a path through this uncertainty. the challenge ahead is to ensure that inflation continues to fall and approaches our objective in a timely way, while at the same time growth strengthens to reach sustainable levels ensuring full employment. the nature of the risks we are facing is however unusual. increasingly, volatility in growth and inflation will be driven by a pair of major structural forces such as 2 / 3 bis - central bankers'speeches geopolitical fragmentation and climate change, that we have next to no experience of. these risks are particularly difficult to quantify and forecast. they present a unique challenge for central banks – a challenge that calls for a different type of response. in this new and highly uncertain environment, we look to academics and researchers to guide us through uncharted waters. it is through path - breaking research, that policymakers'knowledge can grow. furthermore, from my perspective, it has become apparent that aggregate data are not enough, and policy makers need more granular data. micro data firstly improve our understanding of the transmission mechanism of monetary policy and secondly allow us to better understand the aggregate data and thus better forecast their evolution. the combination of methodological developments and the increased availability of granular data may facilitate much richer analysis and more informative quantitative estimation of the impact of various types of shocks and, crucially, the impact of various types of policy measures. that said, the european system of central banks is actively conducting research with the aim to deepen our understanding of how monetary policy transmits to the european economy. the bank of greece has an active research department which pursues several avenues of economic and financial research, both theoretical and empirical. in addition to its own research, the bank of greece is involved in research projects carried out within the wider context of the european system of central banks through its participation in various research networks. i would also like to point out that the bank of greece is one of the first central banks worldwide to engage in climate change and sustainability issues, having set up as early as in 2009 the climate change impacts study committee ( ccisc ). concluding, a major task of central bank research is to bridge the possible gap between academics and policy makers and to create occasions for interactions with the academic community. we trust that research is enhanced by exposure to external ideas and latest advances in the field. once again, it is a pleasure to host today's