total capital. the supervisory board of eesti pank thus resolved to raise the central bank ’ s capital adequacy ratio to the average level of euro area central banks in the long term. in order to bring the ratio into line with eesti pank ’ s participation in the eurosystem, the capital adequacy ratio must be raised. this means that the central bank ’ s equity must be raised from 0. 37 billion euros to approximately 1. 3 billion euros. eesti pank ’ s equity currently stands at 0. 07 % of the eurosystem ’ s total equity, while eesti pank ’ s participation in the eurosystem stands at 0. 26 %. [ quo vadis, euro area? ] 1. it is not only the central banks that can contribute to a successful exit from the crisis – the governments of member states must, as soon as possible, implement the measures taken and agreements made by the european council and the euro area heads of state and government. closer cooperation in the field of economic policy, along with clear - cut, functional rules, serve the interests of all members. 2. even though budget adjustments may curb economic growth in the immediate future, they will help ensure the sustainability of public finances and lower the risk premia of sovereign bonds. we must reverse the growth in debt burden and establish a framework which would support market confidence in the sustainability of public finance management in euro area countries. this is the common interest of all euro area member states. 3. alongside crisis management measures, we must lay emphasis on ensuring stability in the long perspective. to ensure an outlook for growth, we must implement structural reforms to enhance economic flexibility, competitiveness and employment. 4. the key task of the eurosystem central banks, including eesti pank, is to ensure general price stability in the euro area. this should be the principle goal of monetary policy and the main mission of the central bank in its efforts to facilitate economic growth and create jobs. bis central bankers ’ speeches [ concerning estonia ] 1. unlike several other euro area countries, estonia had no need to engage in local crisis management in 2011. 2. the estonian economy showed notable adjustment ability against the backdrop of the uncertain environment. our annual economic growth ( 7. 6 % ) was the fastest in the euro area. moreover, the economic developments were far more balanced than before the crisis : the current account was in a moderate surplus and domestic price pressures remained subdued. unfortunately

deviations were corrected by the economy. otherwise, it would have started pressuring the credibility of the fixed exchange rate. while in the previous monetary system, more fretful analysts might have speculated that the economy would be adjusted through devaluation – the weakening of the currency ’ s value – which would have allowed inflation to remain higher, luckily this is not an option in the monetary union. there is a greater concern upon making long - term economic decisions in the monetary union : whether the euro area ’ s central banks ( that is, the eurosystem as a whole ) are able to keep the pan - european average inflation rate at a suitable level. this means that in the medium term, the inflation rate has to remain below but close to 2 %. while in austria or slovenia, or in estonia for that matter, inflation may temporarily differ from that of the euro area, we have to look at the whole picture when making decisions. the ability of the euro area to keep inflation close to 2 % over the entire past decade has inspired confidence. the average inflation rate has remained slightly below 2 % throughout the history of the single currency and annual inflation has mostly ranged within 1. 5 – 2. 5 %. however, we must not be distracted by our success. the euro area ’ s inflation indicator was over 2 % at the beginning of this year, and, most recently 2. 4 %. this is worrying. bis central bankers ’ speeches the more detailed picture is, of course, more diverse and future monetary policy measures will also have to take that diversity into account. on the one hand, the european economy is just recovering from a deep economic recession. unemployment is higher than usual, the relatively high debt burden is inhibiting borrowing activity in many countries and the majority of the recent price hike stems from global factors, such as the price growth of energy and food on the global market. the prices of other goods and services, on the other hand, have been posting quite modest growth rates. therefore, the inflation expectations of entrepreneurs and consumers have remained close to the historical average. if the price hike of commodities stops, the increase in the euro area ’ s prices could remain below 2 % already next year. however, looking at the data from another angle, we can find proof to arguments which insist that the current euro - area interest rate level is not suitable for guaranteeing the low inflation rate that corresponds to the price stability goal. although the general public focuses on the debt crisis of certain