has taken the decision it has. the second idea is the importance of being faithful to our mandate – price stability – in the eyes of the citizens of the euro area. i am not just thinking of the germans, who coined the term “ teuro ” to express concern about the “ expensive euro ”, or the italians, who consider that price rises remain excessive. i am thinking about all consumers, the 307 million in the euro area, and particularly the least fortunate, who are in all european opinion polls sending us a clear message, asking us to be vigilant. that is the reason why we say to everyone : “ if you are hesitant in your decisions as a consumer because you fear the future erosion of your purchasing power, hesitate no longer, as you can count on us to guarantee the purchasing power of your money. ” the third idea is that our faithfulness to our mandate also allows us to offer the most favourable financial environment possible for growth and job creation. as all savers and investors in europe and throughout the world are convinced of our credibility, they are incorporating in their expectations future inflation in line with our definition of price stability, i. e. “ below and close to 2 % ”. this remarkable result is due entirely to the very high level of confidence in the eurosystem. this result explains in particular why the euro is today recording the lowest rates ever observed and the growth rate of outstanding loans to the private sector is ( at 7. 4 % ) twice that of nominal gdp. as i write, ten - year rates on the best ratings have settled at 3. 1 %. who would have dared envisage that before the creation of the euro? this is why we are saying to businesses : “ investment is your decision, a decision based on a number of criteria. one of those criteria is the level of interest rates. is this not the moment to invest? ” the fourth idea is that, contrary to a wrongly - held but widespread belief, the euro area has the same characteristics as the united states in terms of interregional differences relating to growth and inflation. in the united states, as in europe, there are considerable differences from state to state and from region to region, and the growth and inflation differentials are of the same magnitude in the two economies. on both sides of the atlantic the central bank looks at the relevant area ’ s economy as a whole, for all states or member countries together. i would also like to mention that for each

, european corporations and, amongst them, italian enterprises have largely benefited from the single currency. italy as well as many other european countries experienced several episodes of large exchange rate and interest rate volatility between the 1970s and the mid - 1990s. without the single currency, events in recent years such as the turbulence that followed the september 11 terrorist attacks or the swings in global exchange and stock markets - would have triggered major turbulences in europe as a whole and in many euro area economies, including italy. this, of course, does not mean that external factors have no longer been an important driving force in determining the economic performance of the emu countries in recent years. however, euro area economies proved to be more resilient to external shocks in the 2001 - 2003 downturn, which were mainly caused by a correction of stock market prices and financial instability, than to the external shocks in the downturn of the early 1990s, which were mainly driven by exchange rates volatility. fourth, let me highlight the convergence of inflation rates to low levels across euro area countries thanks to the adoption of stability - oriented macroeconomic policies. a remarkable convergence among euro area member states took already place over the 1990s, triggered by the preparations for emu, and this process has continued in the years after the start of the emu. measured by the standard deviation, the dispersion of inflation rates has more than halved in the period 1999 - 2004 with respect to the years preceding the monetary union. low and stable inflation has been a fundamental achievement for the euro area as a whole as well as for italy. italian inflation was 4 % in 1996 while in the countries that are now part of the euro area it was on average equal to 2. 3 %. in subsequent years italy saw a significant reduction in its inflation gap vis - a - vis the euro area average, despite many adverse shocks that hit both italy and the euro area in recent years [ see chart 2 ]. between 1999 and 2004 italy inflation averaged at 2. 4 % and euro area inflation at 2 %. between 2001 and 2003 italy saw a sizeable increase of perceived inflation [ see chart 3 ]. the concept of perceived inflation aims to measure changes in the inflation rate which consumers think that have occurred in the recent past. usually we can observe a good correlation between the behaviour of actual and perceived inflation, which means that consumers have a relatively correct perception about the changes in their purchasing power. in italy and in some other countries the patterns of actual inflation