rigidities differ. but all countries need to work hard to remove the numerous obstacles to growth, starting with the labour and product markets. ultimately, this effort should be stepped up also at european level, with a view to implementing a true internal market. the most serious repercussion of this crisis would be that the integration of europe ’ s economies moves into reverse and that protectionism within the union stages a comeback. let me conclude. the prospects for economic recovery are fraught with considerable uncertainty. however, this should not be an excuse for inaction, either for policy - makers or for companies. after all, this is not the first time that we have been through very uncertain times. when we look back, can we really say that our countries – whether in europe or even the us – have never experienced comparable levels of uncertainty? consider 1947 – 48, with the post - war recession and the start of the cold war. can we say that in those days the uncertainty was any less than it is today? or even in 1974, immediately after the first oil shock, people here in germany, for instance, were not allowed to drive their cars on four successive sundays. nobody knew exactly how long the world ’ s oil reserves would last. was the world less uncertain than it is today? it ’ s difficult to answer, but i guess there have been cases of high uncertainty also in the past. and people coped and ultimately the economy recovered. of course, the world is more complex today than it was forty or sixty years ago. our societies are older, wealthier. as a result, the reaction might be slower. i think that what is most important is not to fool ourselves into thinking that problems can be overcome by repeatedly postponing them, by borrowing indefinitely from future generations. our economies will face serious challenges in the coming years, not least because, as i mentioned, the post - crisis world will be different from the pre - crisis one. facing up to those challenges calls for action not only from policy - makers but all economic agents – companies, unions, financial institutions, households. immobility is the biggest danger ahead. i hope that over the last couple of years the ecb has shown that it can act quickly and effectively. but it cannot solve all problems. all those who play a part in economic life have to take action, they have to reform our economies so as to restore prosperity. thank you for your attention.

about the merits of this approach. in creating the standard, though, we tried to recognize the measure ’ s limitations and to incorporate sufficient buffers. everyone recognized the possibility of large, statistically improbable losses, and that the measures commonly used underestimated the likelihood of those events. ( we just didn ’ t realize that such extreme outcomes would occur so soon. ) so we required an assumed 10 - day holding period, rather than the conventional single day, in order to account for illiquid markets, and we multiplied the capital that would result from that adjustment by three. we also added a charge for “ specific risk ” to address issuer defaults and other matters. and finally, we required a management process that included crucial checks and balances and further work by banks toward stress testing, including testing involving scenario analysis. these were the “ qualitative ” aspects of the standard. results of stress tests, for example, were to be considered subjectively by management in evaluating a bank ’ s market risks and overall capital adequacy. at the time, many of these elements were criticized as excessive, producing much too large capital requirements. the jury on that point may still be out, but at least the standard performed well last year. none of the us and foreign banks last year that were subject to this internal models approach incurred losses exceeding its capital requirements for market risk, although a few came relatively close. on the other hand, some banks had trading losses that occasionally exceeded their daily value - at - risk calculations during the volatile fourth quarter. my point is not that we were so smart in constructing the standard, but rather that we all still have much to learn. risk measurement practices are advancing, and they need to. with credit risk, we are all feeling our way, again with the assistance of many large banks. supervisors report that these institutions are making progress in measuring credit risk and are devoting increased attention and resources to the task. in my view, continued progress in this area is fundamentally important on many fronts. continually declining costs in collecting, storing, and analyzing historical loss data ; innovative ways to identify default risks, including the use of equity prices ; and greater efforts by banks to build greater risk differentiation into their internal credit rating processes have been of great help. as a result, banks are developing better tools to price credit risk, and they are providing clearer, more accurate signals and incentives to personnel engaged in managing and controlling the risk. through the basel committee