industrial sector increased significantly. overall it seems that, in line with previous expectations, the euro area economy will continue to expand over the rest of this year, albeit at a moderate pace. a glance at the labour market in the euro area also reveals an uneven picture : recovery had already been tentative before and slowed down further in spring. overall unemployment in the euro area currently stands at nearly 10 %, while the individual rates range from 4. 0 % in austria to as much as 21 % in spain. finally, consumer prices have been rising over the past months, and although the increase has slowed down somewhat of late, current inflation stands at 2. 5 % – clearly above the eurosystem ’ s 2 % definition of price stability. to prevent second - round effects and to ensure that inflation expectations remain firmly anchored, the eurosystem has raised interest rates twice this year. challenges in the euro area the major risk for the euro area is probably the uncertainty resulting from the debt crisis in greece and some other member states. however, in mid - july, policymakers agreed on an all - encompassing package to stabilise the situation. first of all, it is important to keep in mind that the situation in greece is exceptional in various aspects, and for these reasons the measures taken should not be extrapolated to other member countries. furthermore, from a central banker ’ s perspective, it is to be welcomed that the european council announced its intention to ensure sufficient capitalisation of banks and adequate collateral. for the eurosystem ’ s refinancing operations, solvent counterparties and sufficient collateral are crucial. when i mention counterparties, please allow me to briefly address one current point of interest in financial markets on both sides of the atlantic : us dollar funding of european banks. this is certainly an area that relevant authorities, including the bundesbank, monitor closely. but let me offer you some assurance about the current situation – in particular, of course, from the german point of view. without a doubt unsecured us dollar funding markets have tightened somewhat recently. for example, us money market funds, which account for a non - negligible but small part of european banks ’ short - term liabilities, have become more selective when providing funding to non - domestic banks. but let me emphasize that we are very far away from the situation we witnessed in 2008. first, liquidity needs can be covered by a number of other means including secured funding with repos. second, if need

be dealt with under the sgp. however, we should refrain from macro fine - tuning – be it at the european or at the national level. such efforts would definitely overburden economic policy and raise expectations that are bound to be disappointed. instead, reasonable macroeconomic surveillance should confine itself to the early detection of harmful domestic imbalances that have significant negative spillover effects on other member countries or even the euro area as a whole. this in principle also precludes the symmetric treatment of current account surpluses and deficits : divergences within the euro area were caused by distortions and the inefficient use of capital in deficit countries. hence, the brunt of the adjustments has to be borne by these countries, whereas – as studies demonstrate – additional stimuli by surplus economies would do little to ease this burden. at the current juncture, the fundamental characteristics of the macroeconomic surveillance procedure are still very vague. in my view, the details need to be worked out first. only once this has been done, can we decide whether it makes sense to complement the procedure with sanctions and what these sanctions might look like. 4. conclusion ladies and gentlemen, the economic and financial crisis has demonstrated that there is ample room for improvement and need for reform in our financial system as well as in the area of eu governance. a look at the global agenda shows that the main messages that the crisis has taught us seem to have been understood. as the recovery proceeds, it is of the essence not to relent in our efforts to implement the necessary measures. if the momentum for structural reforms in the various fields of economic policy can be maintained, we will have made significant progress on the path towards strong, balanced and sustainable growth. thank you for your attention.