, one after another, private research institutes have revised downward their real gdp outlook for the second half of 2011 and for 2012. judging from employment statistics and a manufacturing survey for august 2011, the pace of economic recovery is likely to remain very moderate. at the fomc meeting in late september, it is expected that the fed will deepen discussions on additional easing by extending the duration of the meeting from one day to two, and the fed ’ s potential actions have been drawing attention. the european economy grew strongly at 3. 4 percent on an annualized quarter - on - quarter basis in the first quarter of 2011, but slowed to 0. 6 percent in the second quarter. as in the united states, the european economy was affected by the surge in international commodity prices and partly by the disaster in japan, but the main reason for the decline was the economic slowdown in germany and france, which had been driving growth in the euro area. in the second quarter, germany ’ s growth was 0. 5 percent on an annualized quarter - onquarter basis, versus 5. 5 percent in the first quarter, and france ’ s growth was minus 0. 0 percent, compared to 3. 6 percent in the first quarter. the slowdown seems to reflect a drop in exports to the united states and asian countries, and therefore it is a matter of concern whether growth in both countries will recover in the third quarter, given that european peripheral countries have been subject to low or negative growth due to fiscal austerity. since july, economic activity in the euro area has been lacking signs of resilience, as confirmed by various economic indicators such as business confidence indexes, industrial output, and the unemployment rate. as for the european sovereign debt problem, additional support for greece was decided at the european union leaders ’ summit on july 21 and sovereign bonds spreads against german government bonds and the credit default swap ( cds ) rate temporarily narrowed significantly ; however, since the root cause of the debt problem was not addressed, tensions spilled over to italy and spain, resulting in a spike in government bond yields in both countries, and financial markets became destabilized. against this backdrop, the european central bank decided on august 4 to reinstate a liquidity - providing supplementary longer - term refinancing operation with a maturity of approximately six months, and to restart bond purchases under the securities markets programme. some countries – france, italy, spain, and belgium – started to restrict speculative moves, and on

is the perception that supervisors are overly eager to impose business restrictions, sometimes being portrayed as " triggerhappy. " this misconception creates an impression that regulators are constantly looking for opportunities to clamp down on financial entities. we are sometimes asked by the media, " who is next? " - implying that supervisory actions are routine in nature. in reality, the decision to impose business restrictions is never taken easily. strong supervisory actions are brought in only after careful onsite examinations, offsite data analysis, and extensive engagement with the regulated entities concerned for remediation, often times stretching into several months. our primary goal is to ensure the stability and integrity of the financial system and not to hinder business operations. out of the over 150 banks, over 9, 000 non - banking financial companies as well as about 1, 500 ucbs and other entities we supervise, stringent actions have been taken only in a handful of cases. that too, the most outlier in each category has been called out for such punitive actions so that it has a demonstrative effect on the rest of the industry. these measures are not about penalising but rather about protecting the interests of depositors, customers, and the broader financial system. 4 / 5 bis - central bankers'speeches despite these efforts, it is disheartening to see innovative misinterpretation of regulations. a recent case in point is that of peer - to - peer ( p2p ) lending regulations. the regulations as originally conceived, envisaged the platforms to function like online marketplaces connecting lenders with borrowers, with no credit risk borne by the platform and no co - mingling or retention of funds. however, the supervisory findings over the last one year revealed that some of these platforms adopted practices which were violative of both the letter and spirit of the regulations. instructions issued earlier this month on p2p lending platforms are nothing new but are merely responding to the egregious violations observed in some cases. however, it is being presented in some quarters as if these'new'regulations will'kill'this industry. on the contrary, the differentiated licensing and light touch regulations that were granted to such entities are intended to help them set up a unique platform and not mimic banks or nbfcs that are more robustly capitalised and stringently regulated. conclusion in conclusion, despite occasional brickbats, regulatory frameworks have been adopting a consultative approach which has helped shape a resili