the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) stood at 0. 3 % in december, broadly unchanged since the beginning of 2013. the annual rate of change of loans to non - financial corporations ( adjusted for loan sales and securitisation ) was – 2. 9 % in december, after – 3. 1 % in november. the january 2014 bank lending survey provides indications of some further stabilisation in credit conditions for firms and households and a smaller net decline in loan demand by enterprises. overall, weak loan dynamics for non - financial corporations continue to reflect their lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non - financial sector balance sheets. since the summer of 2012 substantial progress has been made in improving the funding situation of banks. in order to ensure an adequate transmission of monetary policy to the financing conditions in euro area countries, it is essential that the fragmentation of euro area credit markets declines further and that the resilience of banks is strengthened where needed. this is the objective of the ecb ’ s comprehensive assessment, while the timely implementation of additional steps to establish a banking union will further help to restore confidence in the financial system. to sum up, the economic analysis confirms our expectation of a prolonged period of low inflation, to be followed by a gradual upward movement towards inflation rates below, but close to, 2 % later on. a cross - check with the signals from the monetary analysis confirms the picture of subdued underlying price pressures in the euro area over the medium term. as regards fiscal policies, euro area countries should not unravel past consolidation efforts and should put high government debt on a downward trajectory over the medium term. fiscal strategies should be in line with the stability and growth pact and should ensure a growthfriendly composition of consolidation which combines improving the quality and efficiency of public services with minimising distortionary effects of taxation. when accompanied by the decisive implementation of structural reforms, these strategies will further support the still fragile economic recovery. governments must therefore continue with product and labour market reforms. these reforms will help to enhance the euro area ’ s growth potential and reduce the high unemployment rates in many countries. we are now at your disposal for questions. bis central bankers ’ speeches

appropriate remedial action. moreover, although the build - up of financial imbalances, the underpricing of risk and the rise in the degree of leverage in the financial system had been identified as sources of potential instability by international institutions and central banks, including the ecb, their warning signals, which had become progressively louder over time, did not trigger appropriate responses either by market participants or by the authorities responsible for the oversight of individual financial institutions or specific market segments. there is, therefore, a manifest need to strengthen both the macro - prudential and microprudential supervision of the financial system and to do so in a way that achieves valuable synergies and has a mutually reinforcing impact on the stability of the financial system. in particular, the role of macro - financial factors, of the interconnectedness of markets and institutions and of cross - border financial integration in determining the size, nature and propagation of systemic risk calls for the strengthening of macro - prudential supervision in europe and globally. this should help prevent the recurrence of similar episodes of market excesses and corrections in the future, with disruptive effects on the real economy, and it should help ensure that the financial system is dynamically stable and resilient to shocks. iii. the framework for macro - prudential supervision in the eu what are the implications of the lessons of the crisis of these broader policy conclusions for the appropriate design and the effective functioning of the eu supervisory framework? i will address this question by taking as a “ frame of reference ” the pertinent recommendations of the report of the de larosiere group that was broadly welcomed by the european commission. the report is a comprehensive and valuable contribution that deals with a wide range of issues concerning financial regulation, supervision and global cooperation. i will focus on the envisaged framework for macro - prudential supervision, as outlined in the two in the euro area, the largest 30 cross - border banking groups accounted for 73 % of euro area total bank assets at the end of 2007. recommendations, 16 and 19, both because of the importance of establishing such a framework – since it does not yet exist and is urgently needed – and because of the central role that the ecb and the european system of central banks are proposed to play. the report recommends that a new body – called the european systemic risk council ( esrc ) – should be set up, to be chaired by the ecb president, and which should function