the resilience of the american people in the face of adversity. either way i can assure you that the monetary authorities around the world are actively co - operating to minimise the immediate damage, and that they will certainly be monitoring - continuously and very closely - the emerging evidence of more lasting effects. they will react to that evidence in the light of the likely impact on their own situation. the us slowdown came at a particularly bad time for japan. japan was already suffering from a combination of weak domestic demand - particularly consumer demand - and supply - side constraints reflecting pressures on the banking system, heavily burdened with non - performing loans, as well as an acknowledged need for restructuring parts of the non - financial sector. japan has pretty well exhausted the scope for macro - economic stimulus. successive fiscal packages focussed on public works, and a sustained period of attempted monetary expansion, at near - zero interest rates in the face of deflation, have failed to overcome a high rate of precautionary saving by an ageing population facing an uncertain economic future. the policy emphasis of the new japanese administration appears to have shifted towards firmer action to bring about supply - side reform in the belief that this will help to engender greater business and consumer confidence. the danger is that, to the extent that more aggressive restructuring results in bankruptcies and higher unemployment in the short term, that in itself might tend to weaken consumer demand for a time before the benefits of the restructuring come through. it is not clear to me at least that one can realistically expect much additional demand stimulus from monetary policy in these conditions, though no doubt the bank of japan is doing all that it can. here at home the euro area economy seemed comparatively well placed to withstand the effects of the us slowdown. for most of last year it had performed relatively strongly, with overall output growth at above its longer term trend rate and unemployment in the area as a whole falling from its earlier high peaks. a problem, of course, was the recurrent weakness of the euro in foreign exchange markets, despite apparently strong " fundamentals " in terms of any conventional analysis. this euro weakness seemed to be explained by an outflow of capital, much of it drawn into the us by the strong attraction of prospective corporate earnings growth. i would be only too delighted if anyone here this evening could explain to me why the euro has not recovered more strongly than it has in the wake of the us slowdown! the euro's weakness

on the euro area ’ s ability to better withstand external shocks, as well as to increase its growth potential. fiscal policies should also strive to establish a well designed consolidation strategy in those countries struggling with increasing fiscal imbalances. a medium - term, stability - oriented approach for economic policies would eliminate a great deal of the uncertainty currently overshadowing long - term planning and perspectives which would also have positive effects over the shorter term. in fact, at present, the situation of subdued economic growth and the stronger external value of the euro make the structural reforms even more necessary. other issues raised in the draft european parliament resolution on the ecb ’ s annual report let me now turn to some other issues raised in the draft resolution on the ecb ’ s annual report. i have noted - and welcome - that in several important aspects the views expressed in the draft resolution are very similar to those held by the ecb, for instance as regards the need for member states to respect the stability and growth pact and the importance of honouring their commitments under the broad economic policy guidelines, in particular with respect to structural reforms. i also appreciate the fact that your draft resolution welcomes the clarifications of the ecb ’ s monetary policy strategy which we made public in may of this year. these clarifications, while reflecting the overall successful experience with the ecb ’ s monetary policy strategy since its inception, will further foster understanding of the monetary policy of the ecb. while the european parliament and the ecb hold similar views on many important issues,, some differences in views remain, such as regarding the draft resolution ’ s suggestion that the ecb should publish the summary minutes and the balance of votes of governing council meetings. for a number of reasons, which i have pointed out on previous occasions before parliament, we believe that the tools chosen by the ecb to communicate and explain its decisions ensure transparency, are more readily available and better reflect the institutional environment in which the ecb operates. you will also not be surprised that i cannot share the view that the ecb ’ s decision - making process might have been delayed by the fact that most governing council decisions have so far been taken by consensus. indeed, the governing council has taken its decisions in a timely manner, responding appropriately to changing economic conditions whenever required. the draft resolution also refers to the beige book of the federal reserve system as being a benchmark for country - by - country reviews to be conducted by the eurosystem. let