and lucrezia reichlin, which evaluates long - run tendencies and cyclical fluctuations. different growth trends may be due to different patterns of specialisation, which can be desirable within the monetary union provided that countries can share risk through capital market integration. this study and other recent research show that european financial integration has resulted in increasing opportunities to share risk. the paper by ignazio angeloni, luc aucremanne and matteo ciccarelli concentrates on determinants of inflation dynamics in different euro area countries, notably the evidence on the price - setting behaviour of firms and on factors explaining inflation persistence. a thorough analysis of aggregate inflation dynamics and of the inertia characterising core inflation is of direct relevance to the formulation of monetary policy and also contributes to the diagnosis of the causes of growth fluctuations and of the high unemployment in europe. one general conclusion that emerges from the papers prepared for this workshop is that the divergences observed in the euro area are fundamentally the consequence of structural and not of conjunctural factors – even if current divergences may also have been influenced to a certain extent by conjunctural events. the policy implication of this general diagnosis is that more economic reforms are needed to address the structural impediments to growth and the causes of growth and inflation divergences. of course, structural reforms are not always easy to implement, they may be politically costly, and their positive effects may not be immediately visible – which makes it difficult to communicate them and convince the public at large about their benefits. nevertheless, only the implementation of appropriate economic reforms can address effectively and permanently the root causes of the euro area ’ s economic problems. consequently, the focus of the public debate should be how to speed up the reform process and its beneficial effects and thus strengthen consumer and business confidence. the role of the euro in fostering reforms in product, labour and financial markets has the euro been of help in pushing the reform agenda? at the time of the launch of the single currency, some observers had seen the euro as a “ reform whip ” that, together with the completion of the single market, would push in the direction of increased competition, higher productivity growth and greater market flexibility, which are essential for the smooth functioning of monetary union. after all, in a single currency area, the adjustment of domestic imbalances cannot be corrected by exchange rate policy any longer, but rather has to take place via prices and costs. the paper by romain duval and j

headline hicp inflation has been revised down slightly, mainly reflecting the recent appreciation of the euro exchange rate. turning to the monetary analysis, broad money ( m3 ), despite some monthly volatility, continues to expand at a robust pace, with an annual rate of growth of 4. 5 % in july 2017, 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 9. 1 % in july 2017, down from 9. 7 % in june. the recovery in the growth of loans to the private sector observed since the beginning of 2014 is proceeding. the annual growth rate of loans to non - financial corporations increased to 2. 4 % in july 2017, up from 2. 0 % in june, while the annual growth rate of loans to households remained stable at 2. 6 %. the pass - through of the monetary policy measures put in place since june 2014 continues to significantly support borrowing conditions for firms and households, access to financing ‒ notably for small and medium - sized enterprises ‒ and 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 for a continued very substantial degree of monetary accommodation to secure a sustained return of inflation rates towards levels that are below, but close to, 2 %. in order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively to strengthening the longer - term growth potential and reducing vulnerabilities. the implementation of structural reforms needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost euro area growth potential and productivity. regarding fiscal policies, all countries would benefit from intensifying efforts towards achieving a more growth - friendly composition of public finances. a full, transparent and consistent implementation of the stability and growth pact and of the macroeconomic imbalances procedure over time and across countries remains essential to bolster the resilience of the euro area economy. strengthening economic and monetary union remains a priority. the governing council welcomes the ongoing discussions on further enhancing the institutional architecture of our economic and monetary union. we are now at your disposal for questions 2 / 2 bis central bankers'speeches