these have significantly improved financial conditions, reduced financial fragmentation and fostered economic activity and inflation. in the first half of 2016, the euro area grew at an annualised rate of 1. 7 %, similar to last year ’ s growth rate. this figure is far from impressive, especially considering that the euro area is in the early phase of a recovery, after the second recession in 2012 and 2013. on the other hand, the unemployment rate, albeit falling, still remains above 10 %, amid a continuous increase in the participation rate in the labour force since the crisis. one positive aspect is that our policies have contributed to a decrease in financial fragmentation and that the dispersion of gdp growth and inflation across euro area countries is at the lowest level since the beginning of monetary union in 1999. another positive note is that the recent growth was largely driven by domestic demand. moreover, the recovery has proved resilient to a series of adverse shocks over the past year : the slowdown in china last summer, the acute stock market turbulence in the early part of this year and, most recently, the uncertainty created by the u. k. referendum. this resilience reflects, to a large degree, the amount of monetary expansion – actual and expected – that is embedded in financial prices. indeed, with the five packages of measures adopted since june 2014, we have been able to : reduce the cost of capital, produce rebalancing effects in broader asset markets, improve credit supply conditions and restore credit volume growth since the latter part of 2014, after two years of negative developments. in the latest move in march 2016, a powerful set of measures was taken, comprising an increase in the asset purchase programme, its extension to corporate bonds and the introduction of a new mediumterm liquidity facility with interest rates that can go as low as our negative deposit facility rate, contingent on the banks reaching a credit growth benchmark. yields on bank and non - financial bonds have eased in response to the measures taken, testifying to the effectiveness of the current monetary policy. funding conditions for banks improved as wholesale money market rates turned negative and as banks received direct support from new liquidity facilities with four - year maturities and low rates ( tltro - i and ii ). these developments have stimulated the pass - through of this funding cost relief to borrowing costs for both firms and households. 2 / 4 bis central bankers'speeches as a consequence, bank lending rates to non - financial corporations ( nfcs )

we are contemplating such a move. wouldn ’ t negative rates discourage people from keeping their money in banks? this depends on how negative they would be. indeed, rates that fall deep into negative territory could have an impact on depositors. but a deposit rate slightly below zero does not necessarily imply that depositors would be affected, while still providing incentives for banks to lend more. in recent years, the ecb has used a number of non - standard monetary policy tools. it has purchased bonds on the market, pumped hundreds of billions of euro into the market in the form of cheap loans for banks. the ecb has had to use different instruments at different stages of the crisis. now the economic and financial situation in europe is significantly better. financial fragmentation has receded, member states have made significant efforts towards economic convergence and the governance of the euro area has been strengthened. we are gradually moving out of the bis central bankers ’ speeches crisis phase into a different environment, with the focus shifting from solving the crisis to ensuring stable economic growth and inflation close to 2 %. it requires a different approach and different instruments. the developments beyond our eastern border are the big topic of debate in poland at the moment. could the conflict between russia and the ukraine affect europe and its economy in any way? the impact on trade or the financial system has thus far been limited. but this situation does give rise to uncertainty, so it can be regarded as a potential negative factor that could hinder economic growth in europe, and that is part of our risk assessment. what about the strong euro? aren ’ t you worried it could cause problems for european exporters and hinder the recovery? the ecb doesn ’ t target the exchange rate. our primary mandate is price stability, and within this mandate, the exchange rate of the euro is among the factors determining the level of inflation. and indeed, the strong euro is contributing to the current low inflation. consequently, any further strengthening of the euro strengthens the case for more policy action by the ecb aimed at bringing inflation closer to 2 %. is there a risk of global currency wars? each country wants to overcome the crisis as quickly as possible and the easiest way is to weaken its currency and thus improve the position of its exporters. these issues have been discussed many times, including among the g20. countries have agreed that the exchange rate should not become a target for monetary policy. as long as the exchange rates are driven by the various countries ’ internal situations and