about 2½ percentage points. fiscal adjustment in the euro area is continuing in 2012, and it is indeed crucial that efforts are maintained to restore sound fiscal positions. at the same time, structural reforms are as essential as fiscal consolidation efforts and the measures to repair the financial sector. some progress bis central bankers ’ speeches has also been made in this area. for example, unit labour costs and current account developments have started to undergo a correction process in most of the countries strongly affected by the crisis. however, further reform measures need to be implemented swiftly and decisively. product market reforms to foster competitiveness and the creation of efficient and flexible labour markets are preconditions for the unwinding of existing imbalances and the achievement of robust, sustainable growth. it is now crucial that member states implement their country - specific recommendations with determination. we are now at your disposal for questions. bis central bankers ’ speeches

has the potential to affect the balance of risks on the downside. turning to the monetary analysis, the underlying pace of monetary expansion remained subdued. the annual growth rate of m3 stood at 3. 2 % in june 2012, slightly higher than the 3. 1 % observed in the previous month and close to the rate observed at the end of the first quarter. overall, inflows into broad money in the second quarter were weak. annual growth in m1 increased further to 3. 5 % in june, in line with the increased preference of investors for liquid instruments in an environment of low interest rates and high uncertainty. the annual growth rate of loans to the private sector ( adjusted for loan sales and securitisation ) declined to 0. 3 % in june ( from 0. 5 % in may ). as net redemptions of loans to non - financial corporations and households ( both adjusted for loan sales and securitisation ) were observed in june, the annual growth rates for loans to both nonfinancial corporations and households ( adjusted for loan sales and securitisation ) decreased further in june, to – 0. 3 % and 1. 1 % respectively. to a large extent, subdued loan growth reflects the current cyclical situation, heightened risk aversion and the ongoing adjustment in the balance sheets of households and enterprises, all of which weigh on credit demand. a considerable contribution of demand factors to weak mfi loan growth is confirmed by the euro area bank lending survey for the second quarter of 2012. this survey also shows that the net tightening of banks ’ credit standards at the euro area level was broadly stable in the second quarter of 2012, as compared with the previous quarter, for loans to both enterprises and households. looking ahead, it is essential for banks to continue to strengthen their resilience where this is needed. the soundness of banks ’ balance sheets will be a key factor in facilitating both an appropriate provision of credit to the economy and the normalisation of all funding channels. to sum up, the economic analysis indicates that price developments should remain in line with price stability over the medium term. a cross - check with the signals from the monetary analysis confirms this picture. while significant progress has been achieved with fiscal consolidation over recent years, further decisive and urgent steps need to be taken to improve competitiveness. from 2009 to 2011, euro area countries, on average, reduced the deficit - to - gdp ratio by 2. 3 percentage points, and the primary deficit improved by