labour markets. furthermore, the pricing power of firms – notably in market segments with low competition – could be stronger than expected. at this juncture, it is imperative that all parties concerned meet their responsibilities and that second - round effects on wage and price - setting stemming from current inflation rates be avoided. in the view of the governing council, this is absolutely essential in order to preserve price stability in the medium run and thereby the purchasing power of all euro area citizens. the governing council is monitoring wage negotiations in the euro area countries with particular attention. any indexation scheme of nominal wages to prices should be eliminated. finally, further rises in oil and agricultural prices, continuing the strong upward trend observed in recent months, as well as increases in administered prices and indirect taxes beyond those foreseen thus far, could materialise. the monetary analysis confirms the prevailing upside risks to price stability at medium to longer - term horizons. money and credit have both continued to grow vigorously in recent months. the annual growth rate of m3 in november, unchanged at 12. 3 %, is likely to have been influenced by a number of temporary factors, such as the flattening of the yield curve, the financial market turmoil and specific transactions associated with the restructuring of certain banking groups. nonetheless, even taking these special factors into account, the underlying rate of monetary expansion remains strong. moreover, the sustained expansion of loans to the domestic private sector, which grew at an annual rate of 11. 0 % in november, points to the continued vigour of underlying monetary dynamics. monetary developments continue to require very careful monitoring, both to detect underlying trends associated with inflationary pressures at longer horizons and to form a better understanding of shorter - term monetary dynamics. such monitoring will also provide a more complete picture of the response of the private sector to the increased volatility in financial markets. a broad assessment of underlying trends in money and credit growth is particularly important at present given recent financial market developments. heightened financial volatility may influence the short - term behaviour of money - holders and thereby complicate the extraction of the underlying trend monetary developments. at the same time, monetary and credit data can also offer an important insight into how financial institutions, households and firms have responded to the financial market turmoil. for the time being, however, there is little evidence that the financial market turbulence since early august 2007 has strongly influenced the dynamics of broad money and credit aggregates. indeed, the growth of bank loans to the domestic private sector has

##ators. the results of the assessment will be published in a single disclosure, including all three parts of the exercise. the results of the comprehensive assessment will be followed by corrective measures where necessary. the ecb published last week more details on how banks ’ should cover possible capital shortfalls. capital shortfalls will be expected to be covered within six months for those identified in the aqr or the baseline stress test scenario, and within nine months for those identified in the adverse stress test scenario. recapitalisation measures to cover any shortfalls detected should rely on capital instruments of the highest quality, unless the shortfalls are reduced through other means. such other measures could include, for instance, retained earnings, and reduced bonus payments, new issuances of common equity, suitable strong contingent capital and sales of selected assets at market prices. other preparatory work for ssm alongside the comprehensive assessment, a lot of other preparatory work is going on. the ssm supervisory model is constructed so that the decision - making on supervisory matters and other related procedures are kept separate from the monetary policy. as regards supervisory matters, the new supervisory board will have a predominant role ; in most of the cases, it will be the final decision maker. in addition to internal rules and restrictions on exchange of information, a concrete example of this separation is that supervisory function and monetary policy are located in separate buildings and from 2015 even in separate areas in frankfurt. at the practical level in the supervisory model, the joint supervisory teams are key actors. such teams are created for each significant bank or banking group that will be directly supervised by the ecb. joint supervisory teams are responsible for day - to - day supervision of significant banks. each team will be composed of staff from both the ecb and national supervisors. for the legal dimension of the ssm, preparations included the development of the ssm framework regulation on covering cooperation within the ssm, among other things. in this respect, after the public consultation, it was published on 25th of april. from accountability point of view, the ssm has started to publish periodically a report called the ssm quarterly report to the european parliament, the eu council and the european commission. the next report will be published in these days and it covers progress achieved since the publication of the first report in the beginning of february. banking supervision requires a smooth flow of information between banks and their supervisors. to this end, a high - standard data reporting framework and the associated infrastructures for the ssm