same time, though, the variety of possible combinations of macro - prudential instruments also makes the implementation of macro - prudential policy a complex endeavour, which has to take into account interactions, leakages and waterbed effects. going forward, analytical frameworks also need to take these elements into account. macro - prudential policy : implementation issues and effectiveness it is worthwhile to group macro - prudential policies into two categories according to the way they operate. a simple distinction can be made between measures that act through cost - price incentives, like capital requirements, and those that depend on quantitative limits, like large exposures or ltv / dtis limits. capital based instruments act to restrain the boom as long as banks ’ overall cost of funds is sensitive to the structure of its liabilities. we know since countries with more credit booms also experienced more crises ( on average ), there seems to be a trade - off between macroeconomic performance and stability ( ranciere, tornell, and westermann, 2008 ). alessi, l. and detken, c. ( 2014 ), “ identifying excessive credit growth and leverage ”, mimeo. alessi et. al. ( 2014 ), “ comparing different early warning systems : results from a horse race competition among members of the mars network ”, mimeo. gregory, d., kapadia, k., nyman, r., smith, r. and tuckett, d. ( 2014 ) “ news and narratives in financial systems : exploiting big data for systemic risk assessment ”, mimeo. bis central bankers ’ speeches that as long as cost of equity is not too high and not too insensitive to the riskiness of equity itself, this condition will not hold. higher capital requirements will increase banks ’ resilience but may add little to the cost of loans. in an environment of exuberant expectations of house price appreciation, such measures may therefore do little to restrain excessive credit demand. quantitative limits such as the ltv / dti ratio are cruder and therefore more likely to work as long as there are many borrowers who will be affected by them. i will discuss these two types of measures in turn. capital - based instruments in the basel iii framework, the ccb is the main counter - cyclical tool. it is designed to increase banks ’ resilience by making them set aside capital in good times and draw it down in bad times. if

3. 9 % in july 2019. the annual growth rate of overall loans to non - financial corporations continues to be solid, although short - term loans – which are more sensitive to the cycle – show signs of weakness. the annual growth rate of loans to households stood at 3. 4 % in july, after 3. 3 % in june, continuing its gradual improvement. overall, loan growth is still benefiting from historically low bank lending rates. the monetary policy measures we have taken today, including the more accommodative terms of the new series of tltros, will help to safeguard favourable bank lending conditions and will continue to support access to financing, in particular for small and medium - sized enterprises. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed that an ample degree of monetary accommodation is still necessary for the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. in order to reap the full benefits from our monetary policy measures, other policy areas must contribute more decisively to raising the longer - term growth potential, supporting aggregate demand at the current juncture and reducing vulnerabilities. the implementation of structural policies in euro area countries needs to be substantially stepped up to boost euro area productivity and growth potential, reduce structural unemployment and increase resilience. the 2019 country - specific recommendations should serve as the relevant signpost. regarding fiscal policies, the mildly expansionary euro area fiscal stance is currently providing some support to economic activity. in view of the weakening economic outlook and the continued prominence of downside risks, governments with fiscal space should act in an effective and timely manner. in countries where public debt is high, governments need to pursue prudent policies that will create the conditions for automatic stabilisers to operate freely. all countries should reinforce their efforts to achieve a more growth - friendly composition of public finances. likewise, the transparent and consistent implementation of the european union ’ s fiscal and economic governance framework over time and across countries remains essential to bolster the resilience of the euro area economy. improving the functioning of economic and monetary union remains a priority. the governing council welcomes the ongoing work and urges further specific and decisive steps to complete the banking union and the capital markets union. we are now at your disposal for questions. 3 / 3 bis central bankers'speeches