period 1990 – 2010 ( october ), and 6. 5 % below the average for 2000 – 2010 ( figure 1 ). however, and as i will discuss in a moment, current conditions are very different from those prevailing over the past two decades. these factors warrant a somewhat more appreciated real exchange rate than the average for the past twenty years. overall, we are aware of the volatilities affecting the international markets which can magnify the fluctuations of our real exchange rate way beyond its long - term fundamentals. unbalanced recovery of the world economy we observe that the global recovery is very dissimilar between advanced and emerging economies. the us, europe and japan are growing slowly and have high levels of idle capacity and unemployment. the financial crisis has caused them lasting damage in the balance sheets of consumers, banks and governments that will take years to heal. most likely, their demands will continue to grow slowly. recent financial turbulences in europe confirm this scenario. this situation contrasts with growth in latin america and emerging asia. in the past year, these economies have grown above trend, thanks to still expansionary macroeconomic policies, increased external funding available and, in our region, improved terms of trade. output gaps are near exhaustion and policy - makers are withdrawing their stimulus to demand in order to avoid an inflationary resurgence and generate a sustainable growth path. the main projections of the world economy foresee that this disparity between emerging and advanced economies will go on for the next two years. these aspects will be addressed in more detail next week when we present our december 2010 monetary policy report. the real issue here is that the recovery of the developed world will not hold if it happens at the expense of repeating the current account deficits of the pre - crisis years. a recomposition of global demand is necessary. the crisis has left an excess of savings in the world that drives down the international real interest rate. meanwhile, the weakness of advanced economies leads us to believe that they will hold on to their low monetary policy rates for a very long time. these low real interest rates help boost domestic demand in surplus economies with sound financial systems, like ours. the consequence is a global reaccommodation of the currencies : deficit countries depreciate their real exchange rates, while the rest of the world appreciate theirs. within this context, the currencies of most emerging and / or commodity exporting economies are facing pressures for a real appreciation. the chilean pe

rojo ’ s main achievement as governor was his contribution to spain joining the euro as a founding member. in this tribute to his memory, i would like to dedicate this opening address to sharing with you some reflections on the difficult and complex situation the euro area is now facing, on the economic policy lessons we should draw and on some of the measures adopted and those yet to be taken, all of which show that we are, i believe, learning something. we are all mindful of the critical times european integration is facing ; times so different from the first 10 years of the euro, in which the single currency provided all member states with extra stability and defences against all types of shocks. today we face a large - scale crisis, a situation in which we could well use the analytical quality and rigour of figures like angel rojo to correctly gauge the economic policy measures needed to exit the crisis. various causes have led to this situation. but, if you will excuse my simplification, these may be grouped in two main blocks. on one hand, a lack of understanding by the member states of the consequences of belonging to a monetary union, which translated into the adoption of national economic policies inconsistent with the framework adopted in 1999. on the other, a series of weaknesses in the european governance structure which have been progressively highlighted as the crisis has widened and deepened. bis central bankers ’ speeches the diagnosis of the relative role played by national economic policies in the unfolding of the euro crisis is still subject to some controversy. but it would be reasonable to say that the lack of fiscal discipline has been a central factor, given the leading role the debt markets have played in the origin and transmission of tensions. as we learned, the fiscal discipline rules of the stability and growth pact were insufficient to ensure the budgetary rigour needed for the normal functioning of a monetary union without fiscal union, and accorded governments an excessive degree of discretionality. hence, there was a failure during the expansion years to adopt fiscal measures that would have provided greater room for manoeuvre to face the crisis. the crisis also highlighted the interrelatedness which, at times of tension, arises between the three sides of the triangle comprised of sovereign risk, banking risk and the economic fragility stemming from the build - up of macroeconomic imbalances. once one of these factors is activated, there is a serious danger feedback loops will be set in train that do but exacerbate and deepen the crisis.