##s are reflected in their investment portfolios ( e. g. equity, bonds, loans ) and the underlying collateral ( e. g. the value of real estate ). third, the vulnerability of the assets to the physical hazards, which makes it possible to quantify the final potential impact in case those hazards materialise. a vulnerability assessment aims to estimate expected damage as a function of hazards intensity and asset characteristics ( usually a property ). currently, the vulnerability assessment is the most challenging aspect of the physical risk analysis, both from methodological and data availability perspectives. in a final step, the climate and financial information must be combined over the same spatial dimension – which can be an address, a region or country. here, still more efforts are required to improve coverage and reporting of address information in available granular databases which will facilitate the proper identification of physical risk. in order to achieve these challenging goals, the escb has brought together statisticians from across the eu and beyond who are working together to gather appropriate source data, to set methodological standards and to compile suitable indicators. while these three workflows are mandated by the governing council, we are not working on these topics in isolation. the ecb always closely cooperates with our statistical counterparts in the european statistical system, as well as with the european commission more generally. these supply some of the key data on the eu emission trading system ( ets ) and on hazards such as flood risk. we also collaborate on the international stage. examples of both international and european for a, where we are working together with other actors, include initiatives under the auspices of the g20, where the new data gaps initiative includes, as part of its four main statistical and data priorities, work on climate data as well as, here in europe, similar work by the committee on monetary, financial and balance of payments statistics on sustainable finance and climate related risks. in summary, while significant technical work is still required to get the statistics that will underpin its analysis of climate change up and running, the escb is fully engaged in ensuring that users will see a significant increase in the availability of that data and related statistical indicators in the coming years. conclusion let me conclude. fully accounting for housing – the most significant expenditure of households – in the overall price index, as well as providing the statistical infrastructure to integrate climate - related factors into macroeconomic and financial analysis, constitute major challenges for the official statistics community. of course, these challenges reinforce the importance of

strong loan growth to non - financial corporations suggests that the supply of bank credit to firms in the euro area has not been significantly impaired by the financial turmoil thus far. further data and analysis will be required in order to obtain a more complete picture of the impact of the financial market developments on banks ’ balance sheets, financing conditions and money and credit growth. to sum up, a cross - check of the outcome of the economic analysis with that of the monetary analysis clearly confirms the assessment that upside risks to price stability prevail over the medium term, in a context of very vigorous money and credit growth and with no significant signs of supply constraints on bank loans to households and non - financial corporations. the economic fundamentals of the euro area are sound. incoming macroeconomic data continue to point to moderate but ongoing real gdp growth. however, the level of uncertainty resulting from the turmoil in financial markets remains unusually high and tensions may last longer than initially expected. against this background, we emphasise that the firm anchoring of medium to longer - term inflation expectations is of the highest priority to the governing council. we believe that the current monetary policy stance will contribute to achieving this objective. the governing council remains strongly committed to preventing second - round effects and the materialisation of upside risks to price stability over the medium term. we will continue to monitor very closely all developments over the coming weeks. regarding fiscal policies, the intentions reflected in the latest round of stability programmes imply a rise in the euro area general government deficit ratio in 2008. further fiscal pressures are likely to arise as overly optimistic macroeconomic assumptions are already being revised downwards and political demands for fiscal loosening are increasing. in this situation, countries with fiscal imbalances are urged to make further progress with structural consolidation, in line with the requirements of the stability and growth pact. at the current juncture, particularly prudent and stability - oriented fiscal policies would also contribute to containing inflationary pressures. turning to structural reforms, we welcome the launch of the 2008 - 10 cycle of the renewed lisbon strategy for growth and jobs by the european council. the favourable labour market trends in the euro area suggest that economic reforms are paying off. however, many challenges remain as overall employment is still below the lisbon target of 70 % and unemployment is still unacceptably high. moreover, productivity growth remains weak, constraining general income growth. therefore, we strongly encourage euro area countries to increase reform efforts, in particular to foster market integration and to reduce rigidities in