and firms ’ investment, through credit. looking at the euro area today, what is immediately clear is that since our credit easing package in june 2014, we have been benefitting from a more broad - based and domestic demand - driven recovery. this was not the case during the 2009 – 11 recovery which relied heavily on net exports ( chart 6 ). and as the economy has strengthened we have indeed seen the unemployment rate falling significantly. pinning down the precise contribution of monetary policy to this is challenging, but we can see that since june 2014 our measures have triggered a downward convergence of bank lending rates and an upward trend in credit volumes, with borrowing costs in vulnerable countries now approaching those enjoyed by germany and other stronger economies. lending terms and conditions for smes have also converged rapidly towards those of large - scale borrowers. this has been driven in part by the reversal of the unwarranted financial fragmentation we saw in 2011 – 12. but it also reflects a second factor : our measures have helped break a vicious circle between bank lending rates, macroeconomic outcomes and credit risk perceptions in vulnerable countries. when the economy was weak, banks tended to increase lending rates because they feared a higher probability of default. that choked off credit demand, worsened the macro situation and increased delinquencies. those high lending rates were then validated ex post. but starting in the summer of 2014, our measures began to increase competitive pressures on banks to reduce lending margins. bank credit therefore became more affordable, which in turn stoked higher credit demand. and as that has fed through into a better macro picture, loan delinquencies have fallen. accordingly, bank lending rates have fallen and the vicious circle has turned virtuous. 9 / 13 bis central bankers'speeches so our credit easing has helped reverse a negative distributional effect in terms of access to finance. and that is now feeding into aggregate demand through the most interest - sensitive demand components – consumption of durables and investment. after several years of contraction, consumption of durable goods in the euro area has been rebounding, growing at rates not seen since before the crisis. monetary policy has been a key driver. in particular in countries where credit was previously very tight, there is a close correlation between durables consumption and the improvement in credit conditions as recorded in the bank lending survey. the contribution of investment to growth has also been steadily rising. the sensitivity of investment to borrowing conditions seems, it is true, to be lower than it was before the crisis

mario draghi : stability, equity and monetary policy text of the 2nd diw europe lecture by mr mario draghi, president of the european central bank, at the german institute for economic research ( diw ), berlin, 25 october 2016. * * * the most salient feature of the landscape facing monetary policy today is the low level of nominal and real yields everywhere. among the g7, three countries currently have negative yielding 5year bonds – germany, france and japan – representing 14 % of world gdp. and that proportion rises to 22 % if we include bonds yielding less than 1 %. some observers see this as an artificial state generated by the policies of central banks – and argue that it threatens not only economic and financial stability, but social equity too. so what i would like to discuss in my remarks today is why interest rates are so low, and what the implications of those low rates really are. my focus will be in particular on the distributional effects of monetary policy. adjusting monetary policy to a falling natural rate low yields are not merely a legacy of the crisis that beset the global economy in 2008. taking a wider view, long - term interest rates have been on a downward trend across the global economy for the better part of the past thirty years ( chart 1 ). this trend has certainly had positive drivers, namely the success of central banks in advanced economies since the 1980s in achieving price stability and in anchoring inflation expectations. this has reduced both expected inflation and the inflation risk premium embedded in long - term 1 / 13 bis central bankers'speeches interest rates. the taming of inflation explains a large part of the initial fall in nominal yields in the 1980s and 1990s. but there are also more worrying drivers. behind the fall in nominal yields has also been a fall in real yields. this has been attributed to three main factors. the first is a secular slowdown in productivity growth across advanced economies, coupled with pessimistic expectations about growth potential in the years to come, which has reduced the expected rate of return on capital. and if that real rate of return falls, it is logical that firms will only be willing to borrow at lower real rates. this is reflected in lower long - term real yields. the second factor is a global imbalance of saving and investment, which has led real yields to fall even relative to growth prospects. on the saving side, a “ global saving glut ”, produced among other things by ageing populations, has bid up