have selected as a topic for this hearing, euro area inflation rose to 3. 0 per cent in august and we expect it to rise further this autumn. nonetheless, we continue to view this upswing as largely temporary. a range of factors are currently pushing up inflation. chief among them are the strong increase in oil prices since around the middle of last year, the reversal of the temporary vat reduction in germany, and cost pressures arising from temporary shortages of materials and equipment. the impact of these factors should dissipate in the course of next year. although underlying price pressures have edged up over the summer, this is consistent with the opening up of the economy, which remains some distance away from operating at full capacity. as a result, the september ecb staff projections foresee annual inflation at 2. 2 per cent in 2021 then moderating to 1. 7 per cent in 2022 and 1. 5 per cent in 2023. while inflation could prove weaker than foreseen if economic activity were to be affected by a renewed tightening of restrictions, there are some factors that could lead to stronger price pressures than are currently expected. for example, if the temporary shortages of materials and equipment constrain production more persistently than we currently foresee, they could feed through more strongly along the pricing chain. persistently high inflation could also result in higher than anticipated wage demands. but we are seeing limited signs of this risk so far, which means that our baseline scenario continues to foresee inflation remaining below our target over the medium term. favourable financing conditions are essential for the economy to continue its recovery and for inflation to converge durably to our target. we saw market interest rates ease over the summer but recently they have reversed this decline somewhat. however, bank lending conditions have remained very accommodative. overall, this has left financing conditions for the economy remaining very favourable. thus, following a joint assessment of the inflation outlook and financing conditions, the governing council decided earlier this month to set a moderately slower pace of net asset purchases under the pandemic emergency purchase programme. we remain entirely committed to preserving 2 / 4 bis central bankers'speeches these favourable financing conditions, which are necessary for a robust recovery that will restore inflation to its pre - pandemic level. financial stability considerations in our new monetary policy strategy i will now turn to the second topic which you have selected for this hearing, namely the risk of financial dominance. financial dominance occurs when central banks delay the removal of monetary

1992. in short, the single market is now becoming a reality. work on the remaining imperfections of the single market is also advancing. we must not forget that this process has required many decades and continuous political support. why, in the last 50 years, did economic integration face fewer obstacles and actually keep in motion the process of european integration? the main reason is that, from the outset, economic integration removed barriers and thereby secured material and economic benefits. in fact, it has brought widespread benefits by promoting reciprocal trade. trade in fact has grown by several multiples. economic integration has also helped to establish a more competitive environment. we must also not forget that economic integration has rendered all eu countries more interdependent than in the past. under these circumstances, spillovers from national policies could be significant. each country has a stake in the well - being and, let me say, “ good behaviour ” of its partners. given such circumstances, the conviction underlying the maastricht treaty was that nominal exchange rates should be irrevocably fixed to achieve and maintain a truly unified single european market. without a single currency, it was felt that the achievements and deepening of the single market could be endangered. it was a political decision to launch european economic and monetary union among a group of countries, which did not form a fully - fledged political union. taking stock, we may ask : was this move appropriate and well founded from an economic standpoint? for a moment, i want to go back to research on the economic arguments for – and against creating a monetary union. in the 1960s, a group of researchers – following the pioneering contributions of mundell, kenen and mckinnon started posing a crucial question : from a purely economic point of view, what is the optimal area for a single currency? the optimum currency area ( oca ) theory that ensued is well - known to you all and i don ’ t have to say much about it. it is not easy to summarise the many views on the euro area as an oca, or to sum up the vast volume of empirical studies of all oca criteria for european countries. the euro area may not yet be an optimum currency area in all respects to the extent that, for example, the united states is. on the other hand, it scores quite highly under several oca criteria – such as economic openness, diversification in production and consumption, degree of price stability, and several elements