such questions. all the agencies believed that the prudent approach was to delay the npr to gain better understanding of the reasons for the unexpected results. still, this decision presents the u. s. banking agencies with a dilemma. there is good reason to delay the npr and related supervisory guidance, but those very documents are needed to provide more complete blueprints for what banks will need in terms of the databases and systems to implement basel ii. we are not saying that these large entities today have inadequate risk - management systems. rather, they do not yet have the systems for producing basel ii inputs that meet the standards set forth in the basel ii proposal. until the banking organizations have the npr, many just will not be able to provide us the inputs we need to assess how banks would operate under basel ii. the dilemma can be solved only by first issuing the npr. but, we must then have a prudent and flexible way to make adjustments should the resultant data produce results that we, as supervisors, are not comfortable with. the plans developed before the delay in the npr offer just such an opportunity. under those plans, institutions required or planning to move to basel ii would, after the adoption of a final rule, decide when to start their parallel run - with the first opportunity in january 2007. during the required parallel run, each bank would continue to calculate its required capital under the current capital regime and simultaneously calculate its basel ii capital statistics for review by its primary supervisor. when the supervisor believes that the bank has produced four quarters of credible basel ii estimates, the bank would be able to enter a minimum two - year transition run, the earliest in 2008 under these plans. during this transition run, the bank would be under basel ii capital rules, but it could not reduce its capital below 90 percent of what the current capital rules would require in the first year or below 80 percent in the second year. the length of either the parallel run or the transition run could be extended if the primary supervisor had doubts about the bank's basel ii system or the prudence of the resulting minimum regulatory capital level. only after a minimum two - year transition run and only if its primary supervisor had no objection could a u. s. bank operate fully under basel ii capital rules. this phase - in plan has been designed to ensure that bank inputs are reasonable and consistent with sound risk - management practices and that supervisors are comfortable with the safety and soundness of basel ii before it goes fully " live " in

euro area countries, with those banks that participated in at least one of the tltros reducing lending rates to nfcs – including smes – more than non - participating banks. and the july 2015 bank lending survey showed improving lending conditions, which we expect to support the recovery in loan growth. banks have so far been able to buffer borrowers from the higher rates that they now face in the market following the recent re - pricing in financial markets. the improving macroeconomic environment has lowered other costs faced by banks ’, such as the amount of provisioning required for non - performing loans, and has thereby allowed them not to pass - through their higher cost of financing to borrowers. still, credit is starting from a low base and volumes on aggregate remain relatively weak. the justification for our credit easing therefore remains very much in place. moreover, the governing council will remain vigilant that recent volatility does not materially affect the broad array of financial conditions and therefore lead to an unwarranted tightening of the monetary policy stance. on the real side, while our measures are feeding through to domestic demand, we do observe a deceleration in the pace of economic recovery. the latest ecb staff projections see lower growth in 2015, 2016 and 2017 as well as a slower increase in inflation rates compared with the previous exercise in june. the weaker growth outlook primarily reflects slower growth in emerging markets, while the downward revisions to inflation are largely explained by lower oil prices. on account of the external environment, risks to both euro area activity and inflation are on the downside, and these risks have intensified since the cut - off date of 12 august for the technical assumptions which underpin the projections. in this context, the governing council will closely monitor the risks to the inflation outlook over the medium - term. it has emphasised its willingness and ability to act, if warranted, by using all the instruments available within its mandate. in particular, the asset purchase programme contains sufficient flexibility to adjust its size, composition and duration. to sum up, low interest rates are ultimately a consequence of weak secular trends, coupled with the cyclical consequences of a complex debt crisis, exacerbated by a monetary union with institutional and structural flaws. “ normalisation ” is therefore not about the central bank raising policy rates or removing the accommodation provided through its unconventional policy measures – this would only result in too tight a monetary policy stance and make the situation worse – it is about addressing each of these underlying drivers