the basel iii regulatory requirements. in july this year, the ecb published the aggregate results of its vulnerability analysis of banks directly supervised within the single supervisory mechanism ( ssm ). even under the adverse scenario presented in the exercise, the weighted average cet1 ratio remains large enough, and banks can generally continue their role of lending to the economy. the results show just how important it was that banks strengthened their capital positions as a consequence of the regulatory reforms implemented following the 2008 crash. in the area of banking supervision, we did not waste the previous crisis. 1 / 5 bis central bankers'speeches the ecb ’ s monetary policy response equally, or perhaps even more important was the bold and timely response to the covid - 19 shock by the monetary and fiscal authorities. here we can talk about another lesson that we learned on the back of the sour experience of the great recession and the european sovereign debt crisis. in the euro area, monetary policy is a supranational competence, while fiscal policy is conducted on a national level. previously, asymmetric degrees of integration in these policy areas would often prevent the delivery of a coherent aggregate policy mix. this time round, fiscal and monetary policies have been aligned, reinforcing each other – essentially, for the first time ever, as far as the currency union goes. the ecb further loosened its already highly accommodative policy stance. governments introduced new fiscal support measures, while letting automatic stabilisers do the rest of the work. the key part of the ecb ’ s response was the pandemic emergency purchase programme – or the pepp, launched in march. in june, the governing council scaled up the €750 billion envelope for the pepp to a total of €1. 35 trillion – that is about 12 % of euro area gdp. the pepp has a dual role. first, extra asset purchases ensure that medium - term price stability – our primary mandate – is protected. but there is a second element to the pepp related to the title of our first roundtable today – monetary policy and financial stability in the time of covid - 19. purchases under the pepp are conducted in a flexible manner. this allows the programme to restore monetary policy transmission and perform the market stabilisation function. the pepp proved successful in this role during the first months after its launch. the ecb made full use of the flexibility embedded in the pepp by frontloading asset purchases and directing them

next year. the strength of the euro area ’ s economic expansion in the past few months is in line with these forecasts. in fact, recent indicators suggest that, following the period of acceleration, the economic expansion may now have settled at a high rate of growth. the overall level of confidence has remained at, or close to, record highs in recent months. moreover, employment continued to grow strongly in the first half of this year and the rate of capacity utilisation has risen further. taken together, these factors should underpin the growth of private consumption and investment, and thus that of domestic demand. the positive outlook for the euro area is also supported by external developments. the outlook for growth of the world economy, and thus for growth of euro area exports, has remained favourable. forecasts of world growth have consistently been revised upwards over the past few months. expectations of a period of sustained economic growth in the euro area can also be found in euro area bond markets. overall, longer - term bond yields in the euro area have shown a very high level of stability in the course of this year, with fluctuations being contained within a relatively narrow range. the annual rate of increase in the harmonised index of consumer prices ( hicp ) was 2. 4 % in july 2000. recent consumer price developments in the euro area have been very much influenced by the strong rise in oil prices and the depreciation of the exchange rate of the euro. while monetary policy cannot address short - term developments in prices, it is imperative for monetary policy that medium - term upward pressure on prices be contained. the risk that the current pressure on the hicp might spill over onto costs and prices determined in the domestic economy must be taken seriously. this holds true in particular in the context of the favourable prospects for economic growth. the governing council reacted to this picture by raising the main ecb interest rates at its meeting on 31 august 2000. this step followed a series of interest rate increases implemented since november 1999. the governing council will continue to remain alert to emerging risks to price stability. it is a matter of fact that recent oil price increases have caused the terms of trade of the euro area to deteriorate, and thus have also reduced real income. this loss of real income cannot be avoided for the economy as a whole. attempts to shift the burden of this loss within the economy will risk endangering the continuation of a non - inflationary growth process. for the maintenance of price stability, it will