. in this context, the april bank lending survey indicates that the net tightening of credit standards by euro area banks declined substantially in the first quarter of 2012 as compared with late 2011, for both loans to non - financial corporations and loans to households, also on account of improvements in funding conditions for banks. as also indicated in the bank lending survey, the demand for credit remained subdued in the first quarter of 2012, reflecting weak economic activity and the ongoing process of balance sheet adjustment in non - financial sectors. the full supportive impact of the eurosystem ’ s non - standard measures will need time to unfold and to have a positive effect on the growth of loans when demand recovers. in this context, it should be noted that the second three - year longer - term refinancing operation was only settled on 1 march 2012. looking ahead, it is essential for banks to strengthen their resilience further, including by retaining earnings. 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. it is of utmost importance to ensure fiscal sustainability and sustainable growth in the euro area. most euro area countries made good progress in terms of fiscal consolidation in 2011. while the necessary comprehensive fiscal adjustment is weighing on near - term economic growth, its successful implementation will contribute to the sustainability of public finances and thereby to the lowering of sovereign risk premia. in an environment of enhanced confidence in fiscal balances, private sector activity should also be fostered, supporting private investment and medium - term growth. at the same time, together with fiscal consolidation, growth and growth potential in the euro area need to be enhanced by decisive structural reforms. in this context, facilitating entrepreneurial activities, the start - up of new firms and job creation is crucial. policies aimed at enhancing competition in product markets and increasing the wage and employment adjustment capacity of firms will foster innovation, promote job creation and boost longerterm growth prospects. reforms in these areas are particularly important for countries which have suffered significant losses in cost competitiveness and need to stimulate productivity and improve trade performance. in this context, let me make a few remarks on the adjustment process within the euro area. as we know from the experience of other large currency areas, regional diver

##gences in economic developments are a normal feature. however, considerable imbalances have bis central bankers ’ speeches accumulated in the last decade in several euro area countries and they are now in the process of being corrected. as concerns the monetary policy stance of the ecb, it has to be focused on the euro area. our primary objective remains to maintain price stability over the medium term. this is the best contribution of monetary policy to fostering growth and job creation in the euro area. addressing divergences among individual euro area countries is the task of national governments. they must undertake determined policy actions to address major imbalances and vulnerabilities in the fiscal, financial and structural domains. we note that progress is being made in many countries, but several governments need to be more ambitious. ensuring sound fiscal balances, financial stability and competitiveness in all euro area countries is in our common interest. we are now at your disposal for questions. bis central bankers ’ speeches