to be affected over the medium term by the process of ongoing balance sheet adjustment in the financial and the non - financial sector, both inside and outside the euro area. in the view of the governing council, the risks to this outlook remain broadly balanced. on the upside, there may be stronger than anticipated effects stemming from the extensive macroeconomic stimulus being provided and from other policy measures taken. confidence may also improve more quickly, the labour market deterioration may be less marked than previously expected and foreign demand may prove to be stronger than projected. on the downside, concerns remain relating to a stronger or more protracted negative feedback loop between the real economy and the financial sector, renewed increases in oil and other commodity prices, the intensification of protectionist pressures and the possibility of a disorderly correction of global imbalances. with regard to price developments, annual hicp inflation stood at - 0. 1 % in october, according to eurostat ’ s flash estimate, compared with - 0. 3 % in september. the current negative inflation rates are in line with previous expectations and reflect mainly movements in global commodity prices over the last year. in the coming months, annual inflation rates are projected to turn positive again, also relating to base effects. thereafter, over the policy - relevant horizon, inflation is expected to remain positive, with overall price and cost developments staying subdued reflecting ongoing sluggish demand in the euro area and elsewhere. in this context, it is important to re - emphasise that inflation expectations over the medium to longer term remain firmly anchored in line with the governing council ’ s aim of keeping inflation rates below, but close to, 2 % over the medium term. risks to this outlook remain broadly balanced. they relate, in particular, to the outlook for economic activity and to the evolution of commodity prices. furthermore, increases in indirect taxation and administered prices may be stronger than currently expected owing to the need for fiscal consolidation in the coming years. turning to the monetary analysis, the annual growth rates of m3 and loans to the private sector declined further in september, to 1. 8 % and - 0. 3 % respectively. these concurrent declines support the assessment of a moderate underlying pace of monetary expansion and low inflationary pressures over the medium term. in the next few months, the annual growth rates of monetary aggregates will most likely be affected downwards by base effects that are associated with the intensification of the financial turmoil one year ago. more fundamentally, however, the growth of m1 and m3

also suggests that we should not lose sight of the global dimension ; in particular, asia is a large and rapidly growing part of the financial markets. i can understand that the market participants with global businesses would like to see progress towards a global infrastructure ; but they have also been very clear in telling us that the major cross - border costs in securities markets arise from lack of harmonisation. it is for that reason the eurosystem has pledged to engage with market users to start harmonisation efforts firstly within the field of settlement and corporate action processes. market users were right to say that consolidation should not be attempted without harmonisation. global – and transatlantic – harmonisation have to be achieved before single securities infrastructures can be introduced. question 3 : what evolutions are required in post - trading arrangements to support the development of transatlantic trading infrastructures ie nyse - euronext, nasdaq - omx? answer 3 : the first area is harmonisation to ensuring transatlantic and global infrastructures are properly overseen and regulated while accommodating legitimate regional supervisory priorities. i see two challenges here : first, regulators and overseers generally tend to lag behind financial innovation and integration ; and second, europe currently still lacks a common regulatory and supervisory structure and framework, which would be an important pre - requisite in achieving a regulatory level playing field. in cases of transatlantic mergers like the nyse euronext merger, the risk of a potential “ regulatory spill - over ” of existing or future us legislation and regulations would be smaller with the existence of a european sec than without it. so i think the truism that we have to get the european house in order to be prepared for the global challenges is also true when it comes to securities infrastructures. furthermore, there will doubtless be work to enhance or develop relatively efficient settlement links or bridges between the two us settlement engines and various csds in europe, to provide a degree of integration of post trading functionality. the global challenges may be more profound in asset servicing than in settlement – however, i believe that t2s will be of value in simplifying and helping to produce safer and more efficient solutions as the core and central functionality of the financial system.