inflate reported earnings in order to keep stock prices high and rising. this outcome suggests that the options were poorly structured, and, consequently, they failed to properly align the long - term interests of shareholders and managers, the paradigm so essential for effective corporate governance. the incentives they created overcame the good judgment of too many corporate managers. it is not that humans have become any more greedy than in generations past. it is that the avenues to express greed had grown so enormously. perhaps the recent breakdown of protective barriers resulted from a once - in - a - generation frenzy of speculation that is now over. with profitable opportunities for malfeasance markedly diminished, far fewer questionable practices are likely to be initiated in the immediate future. to be sure, previously undiscovered misdeeds will no doubt continue to surface in the weeks ahead as chastened ceos restate earnings. but even if the worst is over, history cautions us that memories fade. thus, it is incumbent upon us to apply the lessons of this recent period to inhibit any recurrence in the future. a major focus of reform of corporate governance, of course, should be an improved functioning of our economy. a related, but separate, issue is that shareholders must perceive that corporate governance is properly structured so that financial gains are fairly negotiated between existing shareholders and corporate officeholders. shareholding is now predominately for investment, not corporate control. our vast and highly liquid financial markets enable large institutional shareholders to sell their shares when they perceive inadequacies of corporate governance, rather than fix them. this has placed de facto control in the hands of the chief executive officer. shareholders routinely authorize slates of directors recommended by the ceo. generally, problems need to become quite large before ceos are dislodged by dissenting shareholders or hostile takeovers. manifestations of lax corporate governance, in my judgment, are largely a symptom of a failed ceo. having independent directors, whose votes are not controlled by the ceo, is essential, of course, for any effective board of directors. however, we need to be careful that in the process, we do not create a competing set of directors and conflicting sources of power that are likely to impair a corporation's effectiveness. the functioning of any business requires a central point of authority. in the end, a ceo must be afforded full authority to implement corporate strategies, but also must bear the responsibility to accurately report the resulting condition of the

, while their implementation could be improved, in particular as regards the preventive arm of the pact. finally, let me support the calls expressed in the report of the high level group chaired by wim kok to renew the impetus in the lisbon process and to sharpen its focus. in this context, we restate our strong support for all efforts on the part of governments, parliaments and social partners implementing the reform agenda and focusing on those reforms that will support employment growth, foster investment and stimulate innovation and productivity. progress in this direction will not only enhance the underlying growth potential of the euro area economy over the medium term but will also help to bolster consumer and business confidence over a shorter horizon. we are now at your disposal for questions.