shy away from as it can encourage market participants to behave more prudently. and it might also improve market discipline : by sharing our views on relevant risks, we create greater transparency about vulnerabilities in the financial sector. what i would like to make clear, though, before closing this chapter is that, while the ecb can contribute to the stability of the financial system, it cannot by itself ensure financial stability. its mandate determines what it can and cannot do. for instance, the ecb cannot provide liquidity to insolvent credit institutions ; and it must comply with the monetary financing prohibition. it is therefore important that all relevant actors are fully aware of their respective responsibilities for financial stability and act in a manner to live up to those responsibilities. the macroprudential perspective what the ecb can do however is more than just identify, assess and communicate risks. as i said before, the ecb was given some relevant competences after the crisis. these competences cover both the macroprudential and the microprudential level. in other words, they cover both individual banks and the banking system. let ’ s start with the system - wide approach and macroprudential policy. this policy area is still 5 / 10 bis central bankers'speeches very young. it was born out of the financial crisis, but it has grown rapidly since then. here in europe, we now have a common framework for macroprudential policy. macroprudential policy has two goals, broadly speaking. first, it aims to make the system more resilient to shocks. and second it aims to dampen the financial cycle, the booms and busts. what role does the central bank play in all this? well, the ecb can only address its macroprudential measures at banks and it ’ s not alone on the stage. the ecb works together with many others – with other european and national authorities. at the european level, the ecb has a strong ally in the european systemic risk board, or esrb for short. the esrb takes a broad view of the financial system. it keeps an eye on banks, insurers, asset managers, shadow banks, financial market infrastructures and other financial institutions. it assesses systemic risk in all these areas of the financial system. and where appropriate, it issues warnings and recommends action. other european authorities, such as the european banking authority, european securities and markets authority, and european insurance and

of continued weak monetary growth. together with the negative annual rate of growth in loans to the private sector ( equal to – 0. 6 % in january 2010 ), the latest data support the assessment that the underlying pace of monetary expansion is moderate and that, in the medium term, the inflationary pressures associated with monetary developments are low. the growth of m3 and loans to the private sector is likely to remain weak also in the coming months. at the same time, actual monetary developments are likely to be weaker than the underlying pace of monetary expansion, on account of the downward impact of the steep yield curve. this fosters the allocation of funds away from m3 and into longer - term deposits and securities. on the other hand, the narrow spreads between the interest rates paid on different m3 instruments imply a low opportunity cost of holding funds in the most liquid components included in m1, which continued to grow at a robust annual rate of 11. 5 % in january. the negative annual growth of loans to the private sector conceals ongoing opposite developments : positive, strengthening annual growth in loans to households on the one hand and negative, declining annual growth in loans to non - financial corporations on the other hand. such differences are consistent with historical patterns and cyclical regularities, which suggest that loans to non - financial corporations can be expected to remain weak for some time after economic activity has picked up. at the same time, the cost of financing for enterprises has declined and the sector as a whole has continued to make extensive use of market - based financing as a substitute for bank financing. banks have continued to reduce the size of their overall balance sheets over the past few months, but the challenge remains for them to manage this adjustment while ensuring the availability of credit to the non - financial sector. to address this challenge, banks should use the improved funding conditions to strengthen their capital bases further and, where necessary, take full advantage of government support measures for recapitalisation. to sum up, the current key ecb interest rates remain appropriate. taking into account all the information and analyses that have become available since our meeting on 4 february 2010, price developments are expected to remain subdued over the policy - relevant horizon. the latest information has also confirmed that the economic recovery in the euro area is on track, although it is likely to remain uneven. overall, the governing council expects the euro area economy to grow at a moderate pace in 2010, in an environment marked by continued uncertainty. a cross - check of the outcome of the