the very beginning. but we think that as far as the corrective arm of the pact is concerned it is important to fully preserve the nominal benchmark of 3 % deficit and the integrity of the excessive deficit procedure. the commission proposes. the council will decide. it was, and it is, our duty to say what we think taking into account the crucial importance of the stability and growth pact for the cohesion of economic and monetary union. in any case, whatever the decision is we will be faithful to our mandate and maintain price stability. [ question ] in this context of low growth and low output, the fact that the population is ageing plays an important role too. is that a factor that the ecb takes into consideration? [ answer ] that is a very important feature. in many euro area countries we are seeing a gradual increase in the less dynamic and less active part of the population, which in general leads to a fall in consumption and investment with the resultant negative effect on the economy. that is another reason why reforms of the health and pension systems and the labour market are crucial. in some countries, specific policies have been adopted to correct this demographic trend. [ question ] of course, low growth in productivity also has an impact on inflation. [ answer ] of course. low growth in productivity means higher unit labour costs. cost - generated inflation tends to rise, and that certainly does not make the ecb's task any easier, given that our job is to maintain price stability within the monetary union. [ question ] on the subject of inflation, the ecb has estimated the euro area's non - inflationary potential growth rate to be between 2. 0 % and 2. 5 %. can you confirm that estimate? [ answer ] the ecb relies in this field also on assessments of market economists ’ consensus and on analyses conducted by other major international organizations. we have noticed that this estimate has been revised downwards recently. if i were to mention a figure today, i would say that a number of estimates are getting closer to 2 % than to 2. 5 %. [ question ] drawing to a conclusion this structural analysis of the european economy's problems, allow me to ask you one more question on the economic climate. what is the ecb's forecast for growth in europe in 2005? is the monetary institute optimistic? [ answer ] we are neither optimistic nor pessimistic. rather we are realistic and humble in front of facts and figures. the ecb

. in other countries, cashless payment instruments have driven down cash usage considerably. likewise, retail payment clearing and settlement is organised differently in the various countries, reflecting local tradition and business preferences. to overcome these entrenched differences, the banking industry joined forces in 2002 and launched the initiative to create the single euro payments area, sepa. the primary objective of this initiative is to achieve a fully integrated market for retail payment services. distinctions between national and cross - border payments should vanish. practically, one set of pan - european payment instruments should be available to serve the whole market, making national legacy payment instruments superfluous. needless to say, such an initiative, which requires unprecedented forms of co - operation among competing market actors, may give rise to competition concerns. it may also get to a situation where the self - regulatory powers of the banking community have reached their boundaries, and regulatory support is required. the european commission and the eurosystem have been supporting sepa by closely monitoring the developments and by providing guidance to the market. the payment services directive ( psd ), which is to be transposed at national level in november of this year, and the revised regulation 2560 on cross - border payments, provide the harmonised legal basis for retail payments in europe. today ’ s second theme will look at competition and regulation issues that emerged in the integration process of retail payment markets. i am very pleased that commissioner neelie kroes will deliver the keynote speech on this theme. the subsequent panel will focus on the role of central banks in shaping the future of retail banking and payments. unlike for target2 and target2 - securities, the ecb and the eurosystem have chosen not to approach the retail payments market as a system owner and operator – although some national central banks that are part of the eurosystem have such operational role – but rather as a catalyst, supporting the market processes by using their technical and analytical expertise as well as consultative and cooperative contacts with the banking sector and other public authorities. tomorrow, we will look at the other challenging dimension that shapes the future of retail banking and payments, which is innovation. i regret to have to say that while the chip, the internet and the mobile phone have fundamentally changed the way we communicate in the last 20 years, modernisation in the way we pay, be it as large companies or as individual retail clients, still have to catch up these developments. therefore, i am pleased to see the focus on the requirements and expectations