##em staff macroeconomic projections, the outlook for headline hicp inflation has been revised upwards significantly for 2017 and slightly for 2018, while remaining unchanged for 2019. the staff projections are conditional on the full implementation of all our monetary policy measures. turning to the monetary analysis, broad money ( m3 ) continues to expand at a robust pace, with an annual rate of growth of 4. 9 % in january 2017, after 5. 0 % in december 2016. as in previous months, annual growth in m3 was mainly supported by its most liquid components, with the narrow monetary aggregate m1 expanding at an annual rate of 8. 4 % in january 2017, after 8. 8 % in december 2016. loan dynamics followed the path of gradual recovery observed since the beginning of 2014. the annual growth rate of loans to non - financial corporations was 2. 3 % in january 2017, as in the previous month. the annual growth rate of loans to households was 2. 2 % in january 2017, after 2. 0 % in december 2016. although developments in bank credit continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and nonfinancial sector balance sheets, the monetary policy measures put in place since june 2014 are significantly supporting borrowing conditions for firms and households and thereby credit flows across the euro area. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need for a continued very substantial degree of monetary accommodation to secure a sustained return of inflation rates towards levels that are below, but close to, 2 % without undue delay. in order to reap the full benefits from our monetary policy measures, other policy areas must contribute much more decisively to strengthening economic growth. the implementation o f structural reforms needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost potential output growth. against the background of overall limited implementation of country - specific recommendations in 2016, greater reform effort is necessary in all euro area countries in 2017. regarding fiscal policies, all countries should intensify efforts towards achieving a more growth - friendly composition of public finances. a full and consistent implementation of the stability and growth pact and of the macroeconomic imbalances procedure over time and across countries remains crucial to ensure confidence in the eu ’ s governance framework. we are now at your disposal for questions. 2 / 2 bis central bankers'speeches

remain valid, though certainly not in the same form and to the same extent as in the recent past. it remains important that policy makers are aware of these benefits when considering possible public action. but it has to be stressed that along with the development of the securitisation market, its complexity, leverage and opacity have significantly increased, which raises serious concerns. the fact that various participants – originators, intermediaries, rating agencies, investors – in the securitisation process have diverse, and often conflicting, incentives plays an important role here. the fights against the adverse consequences of conflicts of interest should be engaged in the first instance by the market participants themselves. in this respect, transparency is a powerful tool. for instance, transaction documentation relating to securitisation operations should explicitly specify possible conflicts of interest and how they are dealt with. in addition, a more standardised and detailed disclosure related to the underlying portfolios of securitisations would be beneficial for the efficient functioning of the market. i appreciate that in this domain of transparency the industry is making substantial efforts. they have to be actively pursued. when self - regulation and / or industry initiatives turn out to be insufficient, regulators have to step in, following a thorough assessment of the costs and benefits of introducing new rules. if there is scope for imposing new rules, it is important, given the global nature of the securitisation process, that they are agreed by regulators at the international level. another aspect i would underline in this context relates to the issuance of covered bonds. indeed, the performance of covered bonds proved up to now to be relatively resilient to the financial market correction compared to asset - backed securities. covered bonds are already the most important privately issued bond segment in europe ’ s capital markets with over eur 2 trillion outstanding at the end of 2007. from a financial stability perspective, they have a number of attractive features, not least the fact that the credit risk stays with the originator, which strengthens the incentives for prudent risk management ; generally they are also more transparently accounted for in banks ’ published accounts than securitisation transactions. banks ’ liquidity management this brings me to a second important area highlighted by the financial market correction, namely liquidity management. indeed, the shaken confidence in the otd model reflected itself foremost in evaporating market and funding liquidity. as banks were forced to take securitized assets on their balance sheet again and provide