however it is still too early to assess the impact of these developments on the outlook for prices. the governing council ’ s expectations for a gradual recovery in growth in the euro area have been confirmed by recent eurostat estimates. these show an improvement from negative growth in the last quarter of 2001 to moderately positive rates in the first quarter of this year. forecasts all point to a continued strengthening in demand. 5. supervision the bank ’ s extensive regulatory tasks were further increased in 2001 when we took over responsibility for more than 2000 insurance intermediaries. in consultation with the industry, and with consumer interests, we developed an effective regulatory system and tackled the re - authorisation process - no small task. following the losses incurred at the aib subsidiary, allfirst, we requested an independent verification of all financial institutions ’ controls and risk management procedures. this is an important exercise, which involves a lot of work for the institutions concerned and indeed for the bank ; however, i think it will be a very worthwhile exercise. we expect the overall review process will be extended over a number of months. as you know, we have also entered into a written agreement with aib and the federal reserve bank in the us to address the specific issues that arose from the events in allfirst. this was a first in international supervisory co - operation for both the fed and the central bank. a fundamental change arose from the publication in april this year of the bill on the structure of financial regulation. we expect its passage to implementation will be given priority by the incoming government. we are already working closely with the interim board of the irish financial services regulatory authority and its chairman, brian patterson. we want to ensure a smooth transition to the re - structured organisation. i am very encouraged by the progress made in the short time that we have been working together. 6. financial results it was a good year for our financial results with profits of €563 million. this was despite the exceptionally high costs we faced with the euro changeover. the successful management of our investment assets of €8. 7 billion played a significant role in this performance. the return on these assets was 6. 74 %, or 16 basis points above the benchmark set by merrill lynch. 7. financial stability responsibility for financial stability is a core central bank function. as was the case last year, the report contains a lengthy chapter on financial stability. the key messages from our report on financial stability are : • the irish banking system is stable,

the figure has quadrupled in the past ten years, reflecting the growth in irish trade, the removal of exchange controls in the context of the single european market and the development of the international financial services centre. this covers only the deposit side of the picture. borrowing by irish residents from overseas banks has also grown rapidly in the past decade. it is now estimated to be of a similar order of magnitude to overseas deposits. access to credit abroad at competitive interest rates, growth in the multinational sector and the ifsc have contributed to this development. this is by no means a comprehensive picture. it does not incorporate cross - border flows in securities and other investments such as equities, for which we do not have specific information. the central bank is aware throughout every day of the broad quantities of funds moving in and out of irish pounds across the foreign exchange market. it does not have knowledge of the movement of funds on behalf of individual bank customers. conclusions before i conclude, may i refer again briefly to monetary policy. in the implementation of monetary policy the first objective of the central bank at all times is price stability. this will also be the first objective of the european central bank and this is made abundantly clear in the maastricht treaty. price stability is the best foundation for a growing economy and for continuing improvements in employment. this has been demonstrated consistently, not just in the irish situation but worldwide.