is broadly unchanged. turning to the monetary analysis, broad money ( m3 ) continued to increase at a robust pace in july 2016, with its annual rate of growth standing at 4. 8 %, after 5. 0 % in june. as in previous months, annual growth in m3 was mainly supported by its most liquid components, with the narrow monetary aggregate m1 expanding at an annual rate of 8. 4 % in july, after 8. 7 % in june. loan dynamics followed the path of gradual recovery observed since the beginning of 2014. the annual rate of change of loans to non - financial corporations increased to 1. 9 % in july 2016, compared with 1. 7 % in june. the annual growth rate of loans to households remained stable at 1. 8 % in july. although developments in bank credit continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non - financial sector balance sheets, the monetary policy measures in place since june 2014 are increasingly filtering through to support borrowing conditions for firms and households and thereby credit flows across the euro area. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need to preserve the very substantial amount of monetary support that is necessary in order to secure a return of inflation rates towards levels that are below, but close to, 2 % without undue delay. monetary policy is focused on maintaining price stability over the medium term and its accommodative stance supports economic activity. as emphasised repeatedly by the governing council, and as strongly echoed in both european and international policy discussions, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute much more decisively, both at the national and at the european level. the implementation of structural reforms needs to be substantially stepped up to reduce structural unemployment and boost potential output growth in the euro area. structural reforms are necessary in all euro area countries. the focus should be on actions to raise productivity and improve the business environment, including the provision of an adequate public infrastructure, which are vital to increase investment and boost job creation. the enhancement of current investment initiatives, including the extension of the juncker plan, progress on the capital markets union and reforms that will improve the resolution of nonperforming loans will also contribute positively to this objective. in an environment of accommodative monetary policy, the swift and effective implementation of structural reforms will not only lead to

essential that we prioritize cooperation, dialogue and diplomacy. given the multitude of conflicts – both large and small – around the world, the last thing we would need is another trade war, particularly between the allies, the european union and the united states. the incoming us administration comes to town with a hawkish trade policy. maintaining a stable trade relationship between the eu and the us – for sure not easy – should be a top priority for policymakers. seldom have trade and security policies been as interlinked as today in europe. simultaneously, we must prepare for possibly turbulent trade relations with the us. europe cannot face such a scenario unprepared, as in 2018. this calls for agility and clear strategic thinking in our decision - making processes. what is also vital during these turbulent times, is the unity of europe. the european commission has both the chance and duty to demonstrate strong leadership within europe now. this unity is supported by the community method in the field of trade policy. while messages on future us trade policy somewhat fluctuate, we need to prepare ourselves for a situation where the eu is threatened by higher tariffs and other trade measures from the us. clearly, a trade conflict harms the economy. in a cycle of retaliation, no one is a winner. hence, a negotiated solution is preferable, but evidently our negotiation position needs to be reinforced by credible potential countermeasures. in this connection, it is worth noting that it is almost certain that european imports of american weapons and lng continue to rise in the coming years, as the european countries increase their defence spending and bolster their energy security. this can be one part of a positive solution for the potential trade negotiations, though europe must avoid again creating unsustainable dependencies. the war in ukraine has made it necessary to strengthen the eu as a strategic entity, although the transatlantic axis remains an anchor stability for europe. the economic sanctions by the eu and the us have weakened russia's capacity to achieve its imperial goals in ukraine, but we must not underestimate its continued capacity to wage the war. consequently, we experience critical weeks and months of uncertainty. and we must prepare our economies and societies to cope with the gathering storm during this winter. slide 4. eu free trade agreements in 2024 : status report due to the prevailing uncertainty about the us trade policy, europe should now invest ever more effort in further developing trade relations with the rest of the world, not least with the emerging and