terms of swiss francs, but only 13 % in terms of us dollars. in the longer term, the weakening in the swiss franc is indirectly contributing to the increase in prices by stimulating demand. second, real short - term interest rates have dropped. there has been a rise in expected inflation for the near future and this means – for given nominal interest rates – lower real expected yields for short maturities. an analysis of monetary conditions in terms of volumes leads to similar conclusions. let us begin with money, which is the best indicator to use if a broad - brush and long - term outlook for the economy and inflation is required. the m1 and m2 monetary aggregates, which were declining until not long ago, have been practically stable for some months. as for m3, it is continuing to exhibit moderate growth. the sub - prime crisis has confirmed the importance of mortgage loans as an indicator of the degree of relaxation of monetary policy. the reason for this is simple. because construction projects are long - term in nature, real estate investment reacts particularly sensitively to interest rates. consequently, mortgage loans were growing at a rate of 5 – 6 % in 2003 and 2004, when our monetary policy was firmly expansionary. these growth rates then declined gradually as we tightened our monetary policy in 2006 and 2007. last april, they settled at around 3. 3 %. the growth rate of other loans – a particularly heterogeneous category – remains high, confirming that the underlying trend in the economy remains dynamic. in december, we emphasised the need to give particular attention to conditions in the credit market in the light of the sub - prime crisis. in order to do this, the snb conducted a survey of 20 banks in march, in which they provided us with information on their intentions and expectations. this survey completed the analysis of credit volumes. it reveals, first, that banks have not significantly tightened lending conditions with respect to either households or companies over the course of the last few months. second, the banks state that, in broad terms, demand for credit has remained unchanged. third, they do not expect any significant change in either supply or demand in the months ahead. thus this survey confirms the conclusions of the analysis of credit volumes which, as we have seen, are continuing to rise. unlike similar surveys conducted in the us and the euro area, it shows that, for the time being, the sub - prime crisis has not led to a deterioration in credit conditions in switzerland. inflation and inflation risks

much ask you to take note of the report. it suggests ample scope for further improving effective competition and removal of unwarranted barriers to cross - border trade. 3 ) the european parliament and the ecb – a constructive relationship to the benefit of europe let me turn to the relationship between our two institutions. the ecb ’ s fierce independence and its accountability to the parliament are two sides of the same coin. in this endeavour, and especially throughout the recent turbulent times, our two institutions have interacted very constructively. the quality of our relations has been instrumental to the exercise of our tasks and, i believe, more generally to the process of european integration. the hearings in your committee are naturally the cornerstone of the ecb ’ s treaty - based accountability obligations. but they are more than that : beyond monetary policy stricto sensu, they have allowed two genuine european institutions – two institutions that only have the bis central bankers ’ speeches whole in mind and not just the parts – to have a continuous dialogue on a number of issues of great relevance for the smooth functioning of the single market of the european union and of emu. this holds in particular for legislative dossiers on which you decide, together with the council, and to which the ecb has contributed. i feel reassured when i see the numerous occasions when you have used your powers to bring europe forward rather than settling for the lowest common denominator. i am confident that this will continue. the latest example is of course the economic governance package. long before the crisis, our two institutions had sent similar messages to governments, in our own ways and through different fora. in november 2003, three weeks into my mandate, the ecb lambasted the fateful decision of the council that effectively watered down the stability and growth pact. let me quote what i said eight years ago during my first regular hearing before your committee : “ the failure to respect the rules and procedures foreseen in the stability and growth pact risks, in our view, undermining the credibility of the institutional framework and confidence in the sustainability of public finances across the euro area. ” in 2005, six years ago, in the name of the governing council i both expressed our “ grave concerns ” as regards the conclusion of the negotiations on the new text of the stability and growth pact, and i raised alarm bells as regards the evolution of the competitive indicators of the various countries member of the euro area. well before some sovereigns run into trouble in 2008