growth – including demand for services – continued to accelerate through 1997, and that was the background to the tightening of monetary policy in 1997. we could not avoid that tightening, despite the uncomfortable sectoral imbalance within the economy. to have done so would, as i have said elsewhere, have put the whole of the economy – including the internationally exposed sectors we would have been trying to shelter – at risk of accelerating inflation, so it would not have helped even those sectors in anything other than the short term. meanwhile, in the euro - zone things were very different. demand and output growth in the major continental economies remained generally fairly sluggish for much of the period, only really starting to pick up towards the end – helped by relatively weak exchange rates. unemployment, which is much the most urgent and important issue confronting europe, actually increased ; and, despite some improvement over the past year or so, it remains at or close to double digit rates in all the largest euro - zone countries. inflation against this background remained low, tending lower – as did interest rates. the position is complicated in the euro - zone by a reviving political debate about just how much of the unemployment reflects supply - side weaknesses requiring structural reforms, and how much it reflects inadequate overall demand. the outcome of that debate will be crucial to the future evolution of the euro - zone. but in the immediate situation there was no reason to suppose that continued growth of demand and output was inconsistent with effective price stability in the zone as a whole. so much for our different starting points. but over the past year, the world – and i mean the world – has changed quite dramatically for both of us in that we have both been affected by the international economic slowdown. this started, in fact, with the financial disturbances in asia in the latter half of 1997, but even as late as the beginning of last summer it seemed as if it might have only limited impact on the overall world economy. the imf, for example, was still then projecting 3 – 3¾ % world growth in 1998 and 1999 respectively – which was certainly a setback compared with their forecast of over 4 % just six months before – but it was hardly catastrophic. since last summer it has become increasingly clear that things are likely to be significantly worse than that. the financial collapse in russia, deepening recession in japan, the long battle – then sudden defeat last week – in brazil ’ s attempt to hold its exchange rate, and fluctuating fears of possible

derived from the european framework of harmonized legislation, from 2005 onwards listed companies, and banks and financial corporations will have to draw up their financial statements in compliance with the international accounting standards. in italy the process of adapting our legislation, including civil and tax law, is under way. the new capital accord for banks known as basel 2 will entail changes in the way financial statements are presented. it will come into force between the end of 2006 and beginning of 2007 and will introduce more efficient methods of defining the capital employed to hedge different types of risk that reflect the best business practices at international level. i affirm once again that, on the basis of existing studies, we do not expect there to be adverse effects on corporate financing, particularly of small and medium - sized firms. in fact the adoption of the new system will certainly encourage banks to become more efficient, improve their ability to assess creditworthiness, and better satisfy the needs of the business sector. at the same time firms must provide banks with exhaustive information about their assets and revenues, and the structure and scope of their activities at home and abroad. all this indicates that accountants will be expected to perform an increasingly important role, and highlights the advisory nature of their work and its contribution to dynamism. they must always be guided by ethics and professionalism. * * * a joint effort is needed, based on a climate of complete trust and cooperation between firms, banks and institutions, to help lay the foundations for economic recovery, foster a reversal of the current trend, and encourage new models of growth to emerge in southern italy as well. the people, the intelligence, the savings and the business ability to do so are all present. i wish to thank you once again and wish you pleasure and success in the performance of your work.