lending rates to euro area firms and households remain close to historically low levels. the most recent bank lending survey confirms that credit standards remain favourable and loan demand continues to increase. together with solid earnings expectations and firms ’ balance sheets, these favourable funding conditions should support business investment. labour market dynamics remain strong, with euro area unemployment at 7. 9 % in december, its lowest level in more than ten years. rising wages should continue to underpin household income and private consumption. lower energy prices are supporting real incomes and should provide an additional impetus to domestic demand. turning to inflation, high levels of capacity utilisation should continue to strengthen labour cost pressures. growth in compensation per employee increased to 2. 5 % in the third quarter of 2018, having increased steadily since 2016. growth in negotiated wages also picked up in the course of 2018. moreover, wage growth has become increasingly broadbased in recent years. this, together with our monetary policy measures and the ongoing 1 / 3 bis central bankers'speeches economic expansion, is expected to translate into higher underlying inflation over the medium term. monetary policy stance in this environment of downside risks to the growth outlook, the governing council decided at its last monetary policy meeting in january to retain its policy stance, confirming the enhanced forward guidance on policy rates and reinvestment. the governing council carefully reviews all incoming data with regard to their possible implications for the medium - term inflation outlook. more concretely, we continuously assess whether inflation is converging towards our inflation aim – that is to levels of below, but close to, 2 % – in a sustained manner. although near - term growth is likely to be weaker than foreseen, in our view, the conditions for ongoing economic growth remain in place – supportive financing conditions, favourable labour market dynamics and rising wage growth. these will continue to underpin the euro area expansion – and thereby contribute to gradually rising inflation. at our meeting in january, we kept our current policy configuration in place. at the same time, we acknowledged that persistent uncertainties and signs of lower than expected nearterm growth call for increased caution. significant monetary policy stimulus remains essential to support the further build - up of domestic price pressures and headline inflation developments over the medium term. indeed, the end of our net purchases in december last year does not imply that our monetary policy has become less accommodative. in fact, ample monetary policy accommodation is still provided by our forward guidance on the key ecb interest rates, which

result in additional eu gdp growth of around 1 % - i. e. around eur 100 billion – over a ten - year period. on a more general note, i would like to recall another principle laid down in the treaty that states that the eurosystem “ shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources ”. 5 this also determines the eurosystem ’ s view that financial integration is first and foremost a market - driven process. in addition to this, the eurosystem sees it as a basic task of public authorities to create a framework conducive to fostering financial integration. if the opportunities thus created have been exploited by market forces, true financial integration will have been achieved and its benefits can be reaped. 3. the eurosystem ’ s contribution to fostering european financial integration as we see it, the basic task of public authorities with regard to the process of financial integration is to create a framework whereby, generally speaking, all potential market participants in a given financial instruments or services market are subject to a single set of rules when they decide to deal with those financial instruments or services, have equal access to this set of financial instruments or services and are treated equally when they operate in the market. the eurosystem generally distinguishes between four types of activity through which it contributes to fostering financial integration. first, we provide central banking services that are conducive to european financial integration. an example of this is the target system that we run, which today handles around 90 % of large - value euro payment traffic. target is one of the two largest wholesale payment systems in the world, the other being fedwire in the united states. target2 – the launch of the single shared platform is planned for november 20076 – will foster financial integration even more. target2 will enable the provision of a harmonised level of services across europe, supported by a single technical platform and a single price structure for domestic and cross - border payments, and it will have new functionalities for banks to better integrate their euro liquidity management. second, we give advice on shaping the legislative and regulatory framework for the financial system. as an example, i would like to mention the eurosystem ’ s contribution to the european commission ’ s consultation on the priorities for financial services policy over the next five years. 7 in this contribution, the eurosystem expresses its support to the key policy orientations of the