economy and has contributed to the overall monetary stimulus needed to bring inflation rates back in line with our inflation aim. conducting monetary policy in the euro area the supportive impact of our policy measures – including all elements of our asset purchase programme – on financing conditions is therefore evident across firms regardless of their size. it is also evident across sectors and across euro area countries. in other words, we are seeing a smooth transmission of our single monetary policy. a single currency entails a single monetary policy. hence, the governing council takes decisions to achieve the primary objective of maintaining price stability for the euro area as a whole. it also establishes the necessary guidelines for their implementation. at the same time, and in accordance with its statute, 2 the ecb has recourse to the national central banks ( ncbs ) to the extent deemed possible and appropriate for carrying out the operations which form part of the tasks of the eurosystem. ncbs in turn have a duty to act in accordance with the guidelines and instructions of the ecb. 3 this decentralised approach takes into consideration the financial structure of the euro area, i. e. a monetary union made up of segmented national financial markets. in such an environment, the close interaction of ncbs with the banks operating in their jurisdiction brings benefits for the implementation of monetary policy. for example, we are able to collect precise information from a wide range of local counterparties, which can be integrated into the harmonised and rich information set that the governing council needs to design policy. moreover, ncbs, knowing well the specificities of their jurisdictions, are well placed to manage assets to be used as collateral in our operations. this makes our decentralised system more efficient than a centralised approach under the current circumstances. in the absence of a truly single market for capital, securities markets still depend very much on national specificities and preferences. a successful capital markets union would abolish dividing lines between jurisdictions, with positive effects on the way we implement our monetary policy. in the end, we should not forget that a fundamental reason for monetary union was precisely to foster more integrated capital markets and reap the benefits in the form of improved financing conditions across the euro area. 3 / 4 bis central bankers'speeches conclusion since you asked me to elaborate on the issue of decentralisation, let me conclude with a final thought in this respect and in particular on the implications for the functioning of economic and monetary union. the fact that the ecb ’ s non

in may 2016, compared with 1. 2 % in april. developments in loans to enterprises 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 annual growth rate of loans to households ( adjusted for loan sales and securitisation ) remained broadly stable at 1. 6 % in may, after 1. 5 % in april. the euro area bank lending survey for the second quarter of 2016 indicates further improvements in loan supply conditions for loans to enterprises and households and a continued increase in loan demand across all loan categories. furthermore, banks continued to report that the targeted longer - term refinancing operations had contributed to more favourable terms and conditions on loans. the monetary policy measures in place since june 2014 have significantly improved borrowing conditions for firms and households, as well as credit flows across the euro area. the comprehensive package of new monetary policy measures adopted in march this year underpins the ongoing upturn in loan growth, thereby supporting the recovery of the real economy. in the light of the prevailing uncertainties, it is essential that the bank lending channel continues to function well. 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 an appropriate degree of monetary accommodation 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 again 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, although specific reform needs differ across the individual economies. 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 non - performing loans will also contribute positively to this objective. in an environment of accom