Let me turn to the financing conditions in the euro area which have deteriorated further since September 2008. With plummeting equity valuations and soaring credit spreads, the overall cost of financing for euro area non-financial corporations has edged upwards. At the same time, bank lending rates have declined.
The turmoil in financial markets that began in the summer of 2007 as well as its impact on economic activity were, at first, limited to the U.S. and European economies, but have since gradually spread to Japan as well as to emerging economies. This global turmoil has now become the largest problem facing the world economy, although the degree of impact varies by country.