growth, and the low level of interest rates. moreover, the recent unwinding of uncertainties associated with geopolitical tensions should contribute to an economic recovery. such an assessment also seems to be reflected in recent financial market reactions. since the end of the war in iraq, financial market volatility has declined significantly, with a notable increase in stock prices. nevertheless, there continue to be downside risks. first, there are the risks originating from the past accumulation of macroeconomic imbalances outside the euro area, and lately concerns have arisen with regard to the sars virus. moreover, there is also some uncertainty over the extent of the adjustment still needed in the euro area corporate sector in order to enhance productivity and profitability, which could have an impact on employment growth and thus private consumption. as regards price developments, the annual rate of hicp inflation generally fluctuated at around 2. 3 - 2. 4 % between the autumn of last year and march 2003. broadly speaking, declining inflation rates in services and non - energy industrial goods have been offset by rising rates in energy and processed food prices. conversely, in april energy prices are expected to reflect the decline in oil prices following the developments in iraq. this expectation is in line with eurostat ’ s flash estimate for the inflation rate in april, which was 2. 1 %, i. e. 0. 3 percentage point lower than in march. looking ahead, current indications do not point to further strong declines in the inflation rate in the immediate future, but lower oil prices, an environment of moderate economic growth and, of course, the effects of the significantly higher exchange rate of the euro should all contribute to reducing inflationary pressure beyond the short term. the outlook for inflation will also depend to a significant extent on wage developments. the available indicators suggest that labour cost growth has shown signs of stabilising in the course of 2002. moderate wage trends are indeed crucial both to maintain price stability and to foster employment growth. in the context of our monetary analysis, focusing on the medium to long term, the broad monetary aggregate m3 has now been growing strongly over a protracted period. moreover, the data for more recent months do not suggest that a process of correction has started. as a consequence, the euro area economy continued to accumulate liquidity significantly above the amount needed to sustain non - inflationary growth. the strong monetary expansion contrasted with the more moderate growth in loans to the private sector. this is consistent with our assessment that

##r and more sustainable economy. by making it easier for investors to seek out sustainable investment opportunities across europe, deep and liquid capital markets could help mobilise the funds needed to finance the transition to a low - carbon economy. it is not only the quantity and availability of private capital that matters for this transformation, but also its quality. ecb research shows, for instance, that equity finance seems to be more effective than debt finance in reallocating investment towards relatively greener sectors. equity investors, who tend to have a longer investment horizon and a greater appetite for high - risk high - return projects might be better placed to finance environmentally sustainable innovation than banks. by supporting the development of equity financing, the cmu could facilitate the funding and adoption of carbon - efficient technologies. but the positive feedback between cmu and sustainable finance works both ways. to the extent that the ongoing eu policy initiatives are successful in removing the current obstacles to the development of a cross - border market for sustainable financial products, these actions could also be instrumental in advancing growth in this segment of the capital markets. this, in turn, could support financial integration in the eu and strengthen europe ’ s role as a global hub for sustainable finance. conclusion developing private equity markets and supporting efforts towards a greener economy are very much on the minds of decision - makers, and we welcome the work of the various groups and forums that contribute to these debates. in particular, we look forward to the recommendations of the high level forum on cmu set up by the commission. we trust these will play an important role in shaping the commission ’ s new set of cmu measures for the benefit of the european citizens. [ 1 ] hartmann, p., heider, f., papaioannou, e. and lo duca, m. ( 2007 ), the role of financial markets and innovation in productivity and growth in europe, occasional paper series, no 72, ecb, september ; davis, j. ( 2015 ), capital markets and job creation in the 21st century, center for effective public management at brookings paper, december. [ 2 ] see rebranding capital markets union – a market finance action plan, report by the ceps - ecmi task force of june 2019. [ 3 ] see speech by luis de guindos, vice - president of the ecb, at the suerf / de nederlandsche bank conference “ forging a new future between the uk and the eu ”, amsterdam