an inefficient medium - term outcome characterised by higher inflation and lower growth. two main factors support this view. first, economic developments are surrounded by a great deal of uncertainty. this uncertainty affects the analysis of both the current state of the economy and its future course. and second, monetary policy operates with relatively long lags, having very little effect on the economy in the short run. past experience has shown that attempts to fine - tune the economy might place in jeopardy the commitment to maintain price stability in the medium term, as is essential for a wellfunctioning economy. once inflation exists and inflation expectations prevail in the economy, the economic costs of the subsequent necessary stabilisation far exceed whichever temporary benefits might have been previously obtained. therefore, the ecb needs to remain focused on the maintenance of price stability in the medium term. the ecb pursues this objective in a consistent and forward - looking manner, ensuring the confidence of all policy - makers, both within and outside the euro area. experience so far suggests that the ecb has been able to keep inflationary expectations at a low level. although current hicp figures in the euro area are adversely affected by energy and food prices, the current outlook is compatible with the maintenance of price stability in the medium term. this view is supported by the analysis of bond yields. it is comforting to see that market participants expect medium - term price developments to remain in line with the ecb's definition of price stability. currently available forecasts give rise to the expectation that inflation will again fall below 2 % in 2002. hence, we appear to be on the right track. however, we must not ignore existing risks to price stability. the governing council of the ecb therefore always stresses that it is vigilant and will take into account all new information that might affect the outlook for price stability in the medium term. let me now conclude by recalling that, while the ecb cannot be held accountable for growth in the euro area, interest rates in the euro area have been relatively low, and cannot, by any means, be considered to be an obstacle to growth. currently, although uncertainty remains high, the general expectation is that growth in the euro area will remain at, or slightly above, trend potential growth in the period ahead. having said that, the ecb would welcome an increase of the already substantial contribution of the euro area to global economic growth. however, this should be achieved in a lasting way,

background, the ecb will definitely follow - up on your request for further analysis. i do not exclude that we will conclude that there is a real case for enhancing the present framework which relies essentially on the vigilance of the financial institutions that are themselves under supervision as regards their counterparty risks on the hedge funds. but i also note that any such enhancement should be agreed upon at the level of the international community and, in particular, on the basis of an appropriate transatlantic discussion. as regards payment and settlement issues, let me first thank the european parliament for the support expressed for the implementation by november 2007 of the target2 system. being an integrated large - value payment system, target2 will provide for efficiency gains and improved liquidity management by banks. in this regard, i should like to refer to an increased pressure to also have an integrated platform for the settlement of securities transactions in euro. the eurosystem is therefore currently examining, in co - ordination with the european commission and in close co - operation with the market, the feasibility of setting up a eurosystem infrastructure for the provision of securities settlement services in central bank money. a decision on whether to offer such a service, referred to as “ target2 - securities ”, is expected in early 2007. in the field of retail payments, we strongly support the efforts to establish a single euro payment area ( sepa ). we welcome the eu commission ’ s initiative for a directive on payment services and i warmly welcome european parliament ’ s contribution to a swift adoption of this directive to assist the banking industry in their implementation of sepa payment instruments as from 1 january 2008. i thank you very much for your attention. i am now available to answer your questions.