john hurley : monetary policy and prospects for the european economy speech by mr john hurley, governor of the central bank and financial services authority of ireland, to the luncheon meeting of eu heads of missions at the french embassy, dublin, 9 march 2006. * * * introduction i welcome the opportunity to talk to you today and thank ambassador grasset for inviting me. high level gatherings such as this, where we have an opportunity to exchange views freely on important european issues, are invaluable and i look forward to hearing your views later. in my brief address, i will touch on the following issues : the experience in relation to economic growth and inflation developments in the euro area, the recent decisions of the governing council in relation to interest rates, some of the risks the euro area economy faces going forward and developments in eu countries outside of the euro area. economic developments i would like to begin by talking about euro area economic performance and prospects. after many years of disappointment, during which economic recovery proved weak and hesitant, the signs are becoming more encouraging. economic activity in the euro area is improving and the growth outlook, while still far from vigorous, is more favourable than it has been for some time. why did economic recovery previously disappoint and why has it now apparently picked up? these are questions which i will now turn to address and, in doing so, shed some light on some of the factors which have shaped the monetary policy environment in recent years. looking back, the euro area has been slow to participate in the global economic recovery that has, more or less, been ongoing since the middle of 2003. until recently, the recovery in activity in the euro area, following the protracted period of slow growth between mid - 2001 to mid - 2003, has been relatively weak compared with the experience of recovery periods in past decades. up until now, euro area growth ebbed and flowed and the recovery did not evolve in the smooth and sustained fashion that would be usual for this stage of the economic cycle. a number of factors account for the sluggish nature of the recovery until recently. first, unlike earlier episodes, the current recovery evolved against a background of sharply rising energy prices and a significant appreciation of the euro. while the impact of rising oil prices on activity has been more muted than has typically been the case in the past, higher oil prices have heightened uncertainty and acted as something of a headwind against a recovery that has lacked any great momentum. a second problem has been the disappointing

of the financial sector. this has been demonstrated by the pensions and insurance authority, the insurers association of zambia as well as securities and exchange commission and the capital markets association of zambia who successfully launched the insurance week under the theme " insurance - solutions for a better tomorrow " and world investor week under the theme " learn more about investor resilience and sustainable finance " earlier this month. i am confident that the key messages disseminated during these events will contribute to raising the levels of financial literacy in the country. be assured that i am committed to supporting the implementation of the national strategy on financial education through such campaigns. ladies and gentlemen the world savings day celebrations would not be successful without recognising individual and organizational contributions towards improving financial literacy in zambia. in this regard, awards will be presented under nine categories namely : 1. exceptional individual contribution to financial education, 2. outstanding theme interpretation ; 3. exceptional leadership in financial literacy ; 4. champions award ; 5. most innovative financial education programme ; 6. outstanding financial literacy footprint ; 7. exceptional financial literacy media outreach ; 8. outstanding initiative by an educator ; and 9. best savings product of the year. i am delighted to grace this year's world savings day award presentation and wish the nominated participants all the best. in conclusion, i would like to thank the organisers and stakeholders under our partnership arrangement, in particular, the bankers association of zambia, securities and exchange commission, pensions and insurance authority, rural finance expansion programme and dsik for their continued support to the world savings day celebrations every year. thank you 3 / 4 bis - central bankers'speeches 4 / 4 bis - central bankers'speeches