quarters, and new stressful situations may arise that could worsen the already precarious situation of the world economy. meanwhile, if the rebound of stock markets and the reduced risk aversion are solid indications that uncertainty is fading out, a more widespread recovery of global output and demand may be seen in the short run at the global level. the materialization of some of these risks could have important implications on the domestic economy, mainly consumers and entrepreneurs ’ expectations possibly taking longer than predicted to improve, or the economy quickly recovering from its current state. aside from the risks inherent to the short - run performance of the economy, there are doubts regarding the medium - term effectiveness of the measures adopted to try to resolve the international crisis, the potential protectionist actions by governments and a possible deflation in developed economies that may delay decisions to consume and invest. global imbalances are still present, and there is also the risk of high global inflationary pressures in the medium term if the large fiscal and monetary stimulus packages in the developed world are not properly managed. domestically, we cannot rule out that, facing a relief in global uncertainty, the magnitude of the macroeconomic impulse under way, deriving from the combination of clearly expansionary fiscal and monetary policies, translates into a strong push to domestic output and demand. nor can we rule out that the measures taken by the government to smoothen the functioning of credit markets, to stimulate investment and to cushion the impact on the labor market of the cyclical situation, facilitate a faster response of the economy to said macroeconomic stimulus and a rapid recovery of expectations. final considerations i would like to end this presentation with some reflections about the economic situation we are going through and the prospects for our economy. the worsening of expectations and the higher uncertainty at the global level are grounded on the change in macroeconomic conditions. however, in our country this is clearly contained, thanks to the soundness of our economy, with strong macroeconomic fundamentals, and capable of implementing and sustaining policies that mitigate the impact from abroad. our financial system, unlike that of other countries, has suffered no dislocations compromising its solvency. inflation has rapidly been reduced, and medium - term expectations are consistent with the target. the board has reduced the mpr aggressively and does not rule out that further cuts may be necessary. accordingly, it reaffirms its commitment to conduct monetary policy so that projected inflation stands at 3 percent over the policy horizon. the worst part of

some critics say that the eu and the ecb are not able to control these imbalances between the regions ; it would seem that the eu economy as a whole has been strengthened as a result of the free movement of labour between regions. is that correct? speaking only of the euro area, let me give you some figures for the number of jobs created in the eight years since the introduction of the euro ; about 12 million jobs were created in this period, which is slightly more than the number created in the same period in the united states. if we look at the figure for jobs created in the eight years prior to the introduction of the euro, it is less than three million. i am not saying that this was solely due to the introduction of the euro ; it is also evidence that the economic reforms within the eu are progressing steadily. that is precisely why we are in full support of the programme of structural reforms, based on the lisbon programme which was adopted in march 2003, that are aimed at achieving economic growth and job creation. the european economy is currently performing well. is this down to the economic cycle or is it something more sustainable resulting from the structural reforms? that is an extremely important question. i would say that in the current situation europe is benefiting greatly from the cyclical effect of the brisk expansion of the global economy, but the effects of the start of the structural reforms, which are clear from the job creation figures i touched on earlier, cannot be ignored. the creation of jobs is a great achievement and it is a result of the boost to internal trade given by monetary union. we still have work to do on improving labour productivity. the ecb considers the current growth potential of the eu to be around 2. 25 %, but this could be increased through improved labour productivity, which is precisely why the agenda of structural reforms embedded in the lisbon programme must be implemented. what do you think are the reasons that labour productivity has failed to improve? are there any particular obstacles to overcome? could it be that the diversity is actually working against reform? no, no, that is definitely not the case. it is simply that we have to continue to reform all our markets – the goods, services, labour and financial markets – to make them more flexible. one problem that i can cite are the large discrepancies between the different sectors in the economy. the reforms are ongoing, but – while productivity in the manufacturing industry has risen rapidly thanks to the introduction of information technology, etc