only 76 % in 2005. increasing potential output growth in europe is today a priority for the euro area, as potential output growth is one of the major catalysts for improvement in living standards. it is also an important issue for the central bank, as potential output can be thought of as the maximum output an economy can sustain in the medium and long term without a rise in inflation. i will first review the past economic growth performance of the euro area, focusing on some of the underlying factors of potential output growth, namely labour resource utilisation ( or labour supply ) and hourly labour productivity growth, in particular in comparison with the us and other advanced industrialized economies. then i will elaborate on the kind of reforms which i consider essential to increase the potential growth rate and the prosperity of europe in the future. the economic performance of the euro area since the mid - 1990s let me start with an assessment of the euro area ’ s economic performance by : first recalling a few general facts, then, analysing the euro area labour market and labour productivity performance in more detail. as i already mentioned, over the period from 1996 to 2005, euro area output grew on average by about 1. 3 percentage points less than in the us, and the gap appears to be persistent 3. the ludwig erhard memorial lecture on “ economic and monetary union : a german perspective ” by dr hans tietmeyer. lecture held at the lse on february 18, 1992. eurostat. since 2003, real gdp grew on average by 1. 3 % in the euro area compared with 3. 5 % in the us. the main factor which explains these developments is the diverging trend in hourly labour productivity growth. labour productivity growth is indeed typically the most important determinant of long - term potential output growth. during the 1980 ’ s and the first half of the 1990s, hourly labour productivity in the euro area grew on average by 2. 4 %, decelerating to on average 1. 3 % between 1996 and 2005. by contrast, us hourly labour productivity growth rose from 1. 3 % to 2. 2 % over the same period. at the same time, the euro area witnessed a slight improvement in the utilisation of labour, which increased on average by 0. 3 % between 1996 and 2005 4 compared with 0. 1 % in the us ] when defined as the total annual hours worked divided by the total population. labour utilisation reflects the extent to which the potential labour resources in an

and expertise of the islamic financial services board, of which the bsp is an associate member, other international organizations and friendly governments which have signified interest in supporting bsp in this initiative, as well as from the rich experiences of outstanding practitioners of islamic banking. to achieve all these objectives, the bsp intends to work towards attaining a suitable legal framework for islamic banking in the philippines. we are currently in the very early stages of drafting a general law for the creation and regulation of islamic banks. consistent with this, we have included in our list of proposed amendments to our charter, a provision that will enable the bsp to develop regulations for the extension of financial facilities to islamic banks. concluding thoughts ladies and gentlemen, there is much work for all of us to do. the task requires strong partnerships among key stakeholders in the government and the private sector and the support of key international organizations and friendly governments. today ’ s workshop is another important step for all of us to work together, share ideas and mobilize support toward promoting islamic banking and finance in the country. indeed, a well - crafted framework for an islamic banking and finance system would ensure that our goal of stretching the coverage of our financial system [ so it casts a wider net ] is attained. in addition, islamic finance with the vast opportunities it offers could potentially trigger inflows of foreign investments. investments, which in turn, could be deployed towards building the necessary infrastructure and other projects to accelerate and sustain economic growth. for certain, an appropriate islamic banking and finance framework would help ensure that the philippines ’ financial system would truly be a more effective catalyst of broad - based and inclusive growth. on that note, let me wish you a most productive workshop. thank you and good morning. bis central bankers ’ speeches