##down in the global economy. virtually all economies – both industrialised as well as emerging – have been moving in the same direction since the end of 2008, which has contributed to the magnitude of the overall current downswing. in conclusion, i would like to draw your attention to three points, which i consider as important : first of all, the full - scale test to which the global financial system is subject reveals an excessive fragility that the prevailing mathematical models had not anticipated. this fragility is unacceptable. the global market economy, in all its elements, including and especially in its financial component, must considerably strengthen its resistance to shocks, i. e. its resilience. this calls for a set of ambitious reforms aiming to introduce, re - introduce and reinforce if need be counter - cyclical mechanisms and the shock - absorbers in the financial system. financial and economic fluctuations are inevitable and necessary in a market economy. it is up to us to ensure that we don ’ t amplify those shocks by our own making and our own rules, as is the case at the moment. shocks, sometimes abrupt, are inevitable : they may come from technology and innovation, from structural transformations that characterise globalisation, from geostrategic risks and many other angles. it is up to us to deal with them as smoothly as possible, not only at the level of the economies concerned but also at global level. the corresponding reforms must be systematic without giving the least privilege to any entity and without focusing attention either on a few scapegoats. as a matter of fact, everything can and must be substantially improved. in second place, we should note the rapid reaction of the public authorities, central banks and governments in particular, in these exceptional circumstances. of course, i am not referring to the decisions taken since the start of the turbulence on 9 august 2007 : you may remember that the ecb ’ s executive board decided to lend overnight at our refinancing rate €95 billion to the commercial banks in the euro area. what i want to talk about are the decisions of the european central bank and the other central banks after the crisis worsened in september concerning the organisation of what i would call a line of defence against a systemic threat of illiquidity : those decisions have led us to expand the collateral framework and to commit to ourselves to refinancing without limit a fixed interest rate, at one week, one month, three months and six months. the governments

themselves have set up a second line of defence against the systemic solvency threat. they have done so by organising, whenever necessary, support to ailing institutions and by systematically supporting the banking sector by means of guarantees and recapitalisation. the difficulties are still there, and in these circumstances there is no room for whatever form of complacency. we have to remain permanently ready to act. my third point concerns confidence. confidence is the most precious ingredient today. it is also the ingredient that is lacking most in the real and financial sphere of the economy at present. having underestimated considerably the true underlying risks that were lying ahead in 2008 and 2009, it would be an error of equal magnitude for the actors of the private sector to now overestimate the risks that are lying ahead over the medium term, for 2010 and beyond. the year 2009 will be very difficult, as i mentioned last thursday. the ecb ’ s governing council considers that economic growth in the global economy and in europe will be substantially lower than projected in early december. however, i see at least four reasons to have confidence in a recovery of the global economy and the industrialised economies over the medium term, after the trying year of 2009 : • the responsiveness of public authorities, central banks and governments, in a difficult situation makes out of the current episode a unique period in economic and financial history. i do not consider that the scope of the actions by public authorities has been sufficiently taken into account by the private actors. • the growth potential of the large and emerging economies is considerable : the deceleration of their growth patterns currently observed will be temporary ; for several of them the potential growth of domestic demand, which today is suppressed, is enormous. • technological progress is remarkable and even accelerating in the current period : it will be the source of an important part of tomorrow ’ s economic growth. • an important factor in the current slowdown has been the spike in oil and commodity prices. this spike was both inflationary and contractionary. the current sharp decline is, by consequence, both dis - inflationary and expansionary. for all these reasons, which are not exhaustive, after an exceptionally difficult 2009, it seems to be a good working hypothesis to me to see 2010 as the year of rebound. the european central bank and the eurosystem will for their part continue to provide a solid anchor of stability and confidence over the medium and long term, in the service of our 329 million citizens.