of the ecb confirmed, on the basis of an analysis of the latest data, its assessment of prevailing upside risks to price stability over the medium term. as price stability is the ecb ’ s primary objective according to its mandate, the governing council judged that stabilising medium - and long - term inflation expectations is its highest priority ; hence, it kept the interest rates unchanged. thus, the minimum bid rate on the main refinancing operations remains at 4 %. the governing council also underlined that the current monetary policy stance will help achieve this objective and reiterated its strong commitment to preventing the materialisation of upside risks to price stability over the medium term. the hikes in the minimum bid rate on the main refinancing operations of the ecb, along with higher money market rates, had an upward effect on interest rates on both deposits and loans in greece ( although their rise was, in general, smaller than in the euro area as a whole ). however, whilst the rate of growth of the overall financing of the economy slowed during 2007, it remained at the relatively high level of 13. 1 % in the fourth quarter. this reflects the high rate of financing of the private sector ( both firms and households ), while the rate of financing of the government sector was negative throughout 2007. these figures suggest that the international financial turmoil had no impact on the supply of bank financing to the domestic private sector until the end of 2007. stability of the banking system in spite of the continuing international financial turmoil, the stability of the greek banking system has remained high, supported by – inter alia – satisfactory levels of profitability and capital adequacy. greek banking groups ’ capital adequacy ratio, which stood at 11. 2 % at end - 2007, continues to provide satisfactory leeway for ensuring the stability of the banking system. greek banks had very little exposure to instruments associated with the us subprime mortgage market and this largely explains the fact that the impact from the international turbulence was limited and indirect. nonetheless, one should not lose sight of the fact that the current turmoil in the international financial system has acquired a dynamic driven by self - feeding and interdependent risks. therefore, its impact does not regard only the degree of individual banks'direct exposure, but also the risk that the turmoil may take on a more systemic character. at the same time, competition in the domestic greek banking market is becoming more intense and the cost of financing is increasing, leading

age population. growth will therefore depend, in part, on raising employment rates by increasing the flexibility of labour markets, bringing into the labour market sections of the population with relatively low participation rates ( especially women and older people ) and continuously upgrading the skills of the labour force. improving productivity growth should also be based on bolstering labour productivity. improving productivity requires first and foremost a modernisation of the business environment. policies in a number of areas could help here. the strengthening of competition in product markets can encourage innovation and the implementation of measures to reduce production costs. competition can be encouraged by removing barriers to business start - ups and reducing the complexity of the regulatory environment surrounding firms. productivity levels in business also depend on the efficiency of public administration. it is commonly agreed that inefficient staff allocation and the operational framework of public administration do not meet the requirements of the greek society and economy in an efficient manner, while reform proceeds at a relatively slow pace. in order to reap the full benefits of the introduction of information and communication technologies in public administration, training of personnel and upgrading administrative procedures are essential. creating the conditions in which economies of scale can be exploited is also important for improving productivity levels. in the past, the small scale of greek enterprises severely hindered their ability to exploit economies of scale. however, globalisation and the opening up of markets in the region have weakened this constraint. additionally, the creation of clusters of firms with similar activities can also help smaller companies benefit from economies of scale by cooperating in cost sharing, know - how transfer and specialisation of services and products. a second area which can contribute considerably to raising productivity is that of infrastructure. despite the progress made, there is ample room for improvements in the areas of both transport ( land, sea and air ) and network industries ( energy, water and communications ). finally, investment in both human and physical capital has an important role to play. with the opening up of new markets in the region, investment in physical capital has now become more attractive. of equal importance is investment in human capital through education and vocational training. whilst in greece the percentage of 20 - 24 year olds who have finished at least high school education is higher than in the eu - 15 countries ( 84. 1 %, compared with 76. 4 % ), the results of the pisa exams designed by the oecd to test knowledge and skills showed greek students performing much worse than students from the other eu - 15 countries. at the same time