the back of the resilience we have built up in recent years – the banking system has been able to support the economy in the first phase of the pandemic. but the shock has not yet fully transmitted to the balance sheet of the banking system. however, as we transition from temporary forbearance measures that addressed liquidity for borrowers there is a need for longer term solutions for those borrowers experiencing solvency and affordability difficulties. we are seeing that some sectors are being more affected than others, e. g. the hospitality and accommodation sector, where economic disruption is affecting employment and the viability of businesses. the inevitable effects of unemployment and business closures will take time to materialise on bank balance sheets. european institutions have played an important role here too. the european banking authority ( eba ), for example facilitated the delivery of payment breaks. they did this through guidelines providing regulatory flexibility so that lenders could offer temporary relief to borrowers in the form of payment moratoria that suspended regulatory rules on loan classifications. while the extent of the effects on the financial system will depend on the evolution of the virus and the scarring effects of this crisis, the deeper european regulatory and supervisory integration has created a more robust and resilient system to withstand the initial shock. the banking system is one element of the financial system, and following the global financial crisis an increasing share of financial intermediation has moved to parts of the non - bank or market - based finance system. to give a sense of scale, non - bank financial institutions now account for almost 60 per cent of total euro area financial assets. the equivalent number in the early years of the euro was under 40 per cent. 10 the scale of the sector in ireland is relevant to the global picture, as our jurisdiction hosts 10 per cent of global money market funds ( mmf ) assets and 5 per cent of global investment fund assets ( excluding mmfs ). 11 there are a range of diverse business models domiciled here, including investment funds, securitisation vehicles and non - securitisation vehicles. the sector in ireland is dominated by investment funds, including mmfs. market - based finance provides a valuable alternative to bank financing and can facilitate risk sharing across the financial system. recognising this, the european commission has produced an action plan to complete the capital markets union ( cmu ) in europe. 12 deeper and more developed capital markets can facilitate long - term investment, by allowing

for this easing is that the elections in france, the netherlands and austria did not yield a positive outcome for eurosceptic parties. to sum up this first part we can say that financial markets are currently in quite good shape, driven by an improved economic outlook, benign political developments and an accommodative monetary policy stance. 3. the financial crisis : monetary policy undergoing change the mandate of the eurosystem states quite clearly that maintaining price stability in the euro area is our overriding priority. that is why we conduct monetary policy. in august, the euro area annual consumer price inflation ( hicp ) was 1. 5 %. this is still below the targeted inflation rate of less than, but close to 2 % per year over the medium term. however, the risk of deflation is now universally considered to be very low. in 2014, things looked different : the euro area inflation was steadily declining and bottomed out at – 0. 6 % in january 2015. but this risk has decreased – also supported by our monetary policy measures. the ecb governing council has been pursuing an accommodative monetary policy stance for a while. since june 2014, a move known as quantative easing has been implemented by the eurosystem in order to bolster financing conditions for banks and the real economy. at the same time credit easing has been extended. the main measures were, briefly : targeted longer - term refinancing operations ( also known as tltros ) that provide financing to banks for up to four years, with the amount that an individual bank can borrow being linked to its loans and lending patterns to the private sector, at extremely favourable ( in some cases, negative ) interest rates ; various asset purchase programmes, grouped under the umbrella acronym app ( expanded asset purchase programme ) : an additional covered bond purchase programme ( cbpp3 ) ; an asset - backed securities purchase programme ( abspp ) ; a corporate sector purchase programme ( cspp ) ; and the large - scale public sector purchase programme ( pspp ) as the main instrument to address weak inflation ; the affirmation that full allotment in regular refinancing operations will continue at least until the end of 2017 ; and in terms of policy rates, a very low interest environment with the main refinancing rate, 2 / 4 bis central bankers'speeches which has stood at 0 % since march 2016, and the negative deposit rate ( negative since june 2014 ; currently – 0. 4 %