that the economy will return to its pre - crisis long - run trend potential output growth rate. the experience of japan suggests that the crisis might have a lasting impact not only on the level of gdp, but also on its potential growth rate. a longer term moderation of the rate of growth of potential output may occur if a deep recession reduces the growth rate of labour in the long run. this can happen if some groups in the labour force are discouraged over time from participating, or if the trends in migration flows are reduced. in addition, more restrictive lending practices and higher risk premia might slow down investment. finally, there is a risk that protectionist measures could distort the efficient international allocation of capital. the crisis has highlighted the urgency of structural reforms in the labour and product markets to limit the crisis ’ negative impact on output and employment. the crisis may become a catalyst for the implementation of structural reforms to increase labour force participation, enhance the flexibility of the labour market, improve human capital, increase competition in goods and services markets and boost investment in r & d. reforms can affect the level and / or trend growth of the potential output. without such measures, it might take a politically inacceptable amount of time to return to pre - crisis output levels and trend growth rates. towards more robust financial framework as stated earlier, from the early stages of the ongoing financial turbulence, public authorities have sought to identify the weaknesses in the financial system and draw lessons to inform policy changes. policy actions have been geared toward maintaining the effective functioning of intermediation services, and to reinforcing the resilience of the financial system and safeguarding its integrity. in this context, i would like to highlight the crucial role that central banks and governments from around the globe have played since the deepening of the crisis in the autumn of 2008, a period during which the strains in the financial sector started to spillover into the real economy. unstable financial markets prompted central banks and governments to take a number of exceptional measures beyond guaranteeing continued access to liquidity. shortand medium - term policy objectives were not only to guarantee continued access to liquidity. in fact, policy measures also swiftly sought to deal with impaired assets as well as recapitalizing viable institutions and swiftly resolving non - viable ones. it is remarkable that this happened despite the absence of a common eu framework for crisis management. governments, for their part, organized a second line of defense against what was qualified by the ecb as “

world economy throughout most of history. second, although the fiscal position of china was sound, other vulnerabilities have been disclosed. a growth model that is highly concentrated on exports is at risk when external demand drops sharply. a broadening of the macro economic policies would reduce this exposure. the growth model, thus, would become more sustainable. tackling this issue would also be a contribution to deal with global imbalances. one step on this way for sustainable growth and an orderly rebalanced global economy could be the enhancement of social safety nets. a coherent system of reforms of social security, health care and pension schemes would reduce the need for precautionary savings of private households and could thus stimulate private spending. this holds in particular for the challenge of an ageing society. a shift from economic activity from the public to the private sector would be helpful in this respect, just like corporate governance and financial sector reforms, or a reflection on local government finance. there are some encouraging indications that measures to increase household income, notably in rural areas, expected to feature prominently the new five - year plan starting in january 2010. this could be an important contribution to a broadening the chinese economic approach, and to move to a more quality oriented growth. concluding remarks i am convinced that cooperation between the major players in the world economy is crucial. to tackle global imbalances, each continent has to do its homework. for china, continuing the rebalancing process from external to domestic demand, from huge public enterprises to private enterprises, demographic ageing and dispersion are no less challenging. in such an environment the increased role of the renminbi will be one part. the european union must resume the path of institutional deepening. it needs less divergence and more structural reforms to enhance growth and employment. also, enhanced stability in the financial sector is of the essence. we must furthermore strengthen the economic governance of the european union with reforms designed to a stable euro and strengthen the foundations for sustainable public finances. in such a surrounding the euro can and will stay a credible currency. to sum up, both economic areas have – to use the word of premier wen jiabao who spoke recently in tianjin – to undertake efforts to ensure, first, better balance, second, coordination and, third, sustainability of economic development.