has been boosted just as much as lending to companies. so we have seen an overall rise in the propensity to invest. the negotiated wage agreements also show that our measures are having an impact. wage growth in the euro area stands at more than 2 %, and it is even slightly higher in germany. that will push up prices. but it is slower than we had thought. why? the level of economic growth is one factor, but another is the labour market. as far as economic growth is concerned, there have been repeated setbacks over the past few years. geopolitical uncertainties such as brexit and the threat of protectionism are currently weighing on economic sentiment. that is also why inflation remains subdued. moreover, it has taken a long time for the decline in unemployment to be reflected in higher wages. the number of people who lost their jobs in the crisis but never registered themselves as unemployed has been underestimated. when the economy revived, these people returned to the labour market. a great many people, above all part - time workers, began to work longer hours when the upswing set in. in brief, the labour supply was underestimated. it ’ s only when the labour market has thoroughly cleared that 1 / 3 bis central bankers'speeches wages start to climb more steeply. we ’ re seeing that in germany for example. one serious criticism of the ecb ’ s programme is that it is effectively only subsidising the southern crisis countries. the central bank has pushed interest rates down. without this life - saver, italy would have gone bankrupt long ago and the euro would have been history. hold on a moment. all have benefited from the measures. the savings for taxpayers resulting from lower interest rates were nowhere as high as in germany. but isn ’ t it also true that the ecb is indirectly financing governments here? any creditor who invests in italian or spanish government bonds knows that the ecb will buy these bonds off them in the future. even though i am not the strongest advocate of our government bond purchases, we do not finance individual governments with them, directly or indirectly. our aim is to maintain price stability. thanks to our bond purchases, interest rates go down and loans become cheaper, primarily benefiting households and businesses. besides, we have a very clear set of criteria for the timing, selection and volumes of our government bond purchases. our parameters ensure that the private market for government bonds remains intact. one sign of

are very well aware that price pressures are likely to remain subdued for a prolonged period of time but we expect inflation rates to converge again towards 2 per cent as the cyclical upswing of the economy takes hold. we are at the same time very conscious that, if some of the downside risks do materialise, then – because price pressures are already weak today – we would act decisively again. this view is very strongly shared by the governing council members. what are the scenarios that could lead you to act? there are a number of downside risks that we have identified. they relate to the state of the economy and downside risks to growth, a tightening of global financial conditions with undue spill - overs to the euro area, energy prices, and – last but not least – a fatigue in structural reforms in europe. this would mean that investments do not pick up and that business confidence doesn ’ t improve further. for me that ’ s the most bis central bankers ’ speeches important aspect of all – that structural reforms are being implemented so as to improve growth potential, employment opportunities and overall confidence. however, for this last downside risk, monetary policy has clearly its limits in what it can do. another risk would be that, as a result of the comprehensive assessment, there could be some dampening effect in the short term. that risk is still fairly limited and temporary – and should be compensated for by the expansionary effects over the medium term, which will positively affect confidence in the nearer term. we will be monitoring this risk from a monetary perspective. however, this potential procyclical effect of an aqr should not lead to softening the rules of the aqr. the instruments you use to handle each scenario may depend of the nature of the shock. each instrument has a different impact and any of the measures taken would depend on our analysis of the monetary and economic developments. could you just say a little bit more about the possible impact of the aqr? a strong comprehensive assessment makes central bank action more effective. monetary policy does not work as well if banks ’ capital basis is thin and insufficient to support lending. in the us, you can intervene directly in the markets to transmit monetary policy stimulus, because the markets play a bigger role in financing the economy. here, the pass - through of your monetary policy is primarily via the banks and it takes time. the comprehensive assessment should shorten the time it takes for monetary policy to impact the real economy. indeed