##ed policy efforts in all economies, especially the large ones, are necessary so that world trade can be revitalised and financial capital flows stabilised. this will help support the emerging market economies and global growth. the policy strategies pursued need not be identical across countries and regions and the required size of the economic stimulus and the nature of the other measures taken need not – and should not – be the same, as structural and conjunctural conditions differ. nevertheless, a similar orientation and consistency is warranted. see international monetary fund, global financial stability report market update, 28 january 2009, p. 2. based on data available up for january 2009. since the intensification of the financial crisis in september 2008, central banks and governments globally have acted in a decisive and concerted manner to contain the adverse effect of the financial crisis on the real economy and promote its recovery. in the euro area, the actions taken by the ecb and the eurosystem are unprecedented in size and scope. government support for financial institutions in the form of recapitalisations, guarantees on bank debt and, more recently, asset relief schemes, have been significant and the pertinent measures are progressively being implemented. and the fiscal stimulus packages of euro area governments are substantial, amounting to a total of about 2 % of euro area gdp over this year and the next. the immediate priority of macroeconomic policies and bank support schemes is to promote the economy ’ s recovery and preserve price and financial stability. yet, a fundamental policy objective should be that the recovery of activity and the repair of the financial system have to be achieved in a manner that will ensure a sustained growth performance and will prevent the recurrence of episodes of financial imbalances and market excesses that can threaten again financial stability and economic welfare. put differently, it is important that the policies and reforms pursued today lay the foundations for sustained growth. let me now elaborate on these issues by focusing on the role and contribution of central bank policy and of financial system reform. central bank policy the ecb ’ s monetary policy and provision of liquidity have played a key role in containing the downside risks to price stability, supporting economic activity and stabilising the financial system. the extent of the monetary policy easing since last october has been unprecedented, with key ecb policy interest rates having been reduced by 275 basis points. at the same time, money market rates have declined even more from the peaks reached in october 2008 as a result of the

s essential that labour can flow to the most productive firms, rather than being bottled up in the least productive. that in turn requires that the most productive firms are able to grow and create new jobs. and it requires that workers have the incentives, skills and means to move to them. in an average mature economy, around 50 % of productivity growth comes from such reallocation. when people think about reallocation, they tend to think in terms of people moving across sectors. but typically, that only accounts for a small share of productivity growth. 18 what ’ s more important for mature economies is within - sector reallocation, which means shifting resources towards the most productive firms within each sector of the economy. that ’ s encouraging because expecting, say, steel workers to become bankers is not realistic. but expecting them to move to better firms within their sector is. for this to happen, however, the structural conditions have to be right. product markets have to allow market entry, to challenge unproductive firms ; they have to support firm growth, so that the most productive can reach their optimal size ; and they have to facilitate quick bankruptcy, so that the weakest firms can exit. similarly, labour markets have to set incentives for mobility ; support retraining and upskilling where needed ; and allow wages to match productivity at the firm level, creating proper market signals. clearly, for firms to prosper in this environment, they need to be agile. increased agility would enable firms to switch production towards the higher quality, distinctive, more customised goods and services increasingly demanded by ever more sophisticated customers, which has long been the strategy of europe ’ s leading exporters. 19 and since such goods and services typically command a price premium in the market, that would in turn lift the value of output, raise national income and secure and expand employment. david autor and david dorn, the growth of low - skill service jobs and the polarization of the us labor market, american economic review, 2013, 103 ( 5 ) : 1553 – 1597. see the article entitled, “ what is behind the recent rebound in euro area employment? ”, ecb economic bulletin, no. 8 ( december 2015 ). ulf lewrickb, lukas mohlera and rolf weder, when firms and industries matter : understanding the sources of productivity growth, bis working papers no 469 ( october 2014 ). among several other papers, see e. g. krizan