accomplished ”. what has been achieved so far is not enough. the answer to the remaining challenges could take the form of a “ convergence process 2. 0 ”, which should have an agreed timeline and milestones. but convergence can only be sustainable if it is associated with a commensurate deepening of integration, if it is a race towards best practice institutions and policies rather than towards mere nominal outcomes. in this context, structural reforms, if properly designed, lead to greater prosperity in each country and, at the same time, ensure greater resilience of emu as a whole, thereby contributing to economic and social stability. growth and stability are therefore mutually reinforcing. the convergence process should consist of two legs : on the one hand, it should underpin the convergence of economic policies and structures at the national level. on the other hand, it should facilitate joint action. at the national level, convergence implies that euro area governments need to step up structural reforms, in particular those which have the greatest efficiency gains given the relative distance to best practices. and policy - makers should pay due attention to ensure that the burden of the adjustment effort is shared fairly. bis central bankers ’ speeches the convergence in national structures could be complemented by joint action at the european level to increase investment and by the transfer of certain budgetary responsibilities to the european level with a view to strengthening risk - sharing within the currency union. but joint action can only occur once trust has been restored across countries and within countries, and the convergence process has advanced successfully. the level and the form of budgetary responsibilities, and how they are matched by appropriate democratic arrangements, should emanate from the political process. the biggest threat to the single market is not euro area integration : it would be euro area stagnation. the challenge of making the emu work is far from over. let ’ s get ready for the next stage of the race. intro ladies and gentlemen, let me first of all thank the economist for inviting me to this distinguished panel. almost exactly ten years ago, the olympic triathlon took place here in vouliagmeni. on race day, the weather was as hot and as dry as it is today. the athletes needed to have two important attributes in order to be able to compete in a triathlon in these conditions : resilience to withstand the heat and commitment to endure all three disciplines with equal passion. economic and monetary union ( emu ) is a political triathlon. it requires

may see some further slight increases in inflation in the second half of this year. looking further ahead, we continue to expect price developments to remain moderate over the policy relevant medium - term horizon. our monetary analysis confirms that inflationary pressures over the medium term should be well contained. this is reflected in particular in the overall weak growth of money and credit. the annual growth rate of loans to households is continuing to strengthen, but the growth rate of loans to enterprises has remained negative, as expected in the current phase of the cycle. suggestions that inflation might be unanchored are entirely unfounded. on the contrary, euro area inflation expectations appear to be remarkably well anchored, in line with our definition of price stability. given the outlook for price stability and the solid anchoring of longer - term inflation expectations, the governing council regards our monetary policy stance and the current level of key ecb interest rates as appropriate. in order to cope with tensions on the money markets, the governing council has decided to reintroduce some of our previous non - standard measures. in particular, we have gone back to full allotment in 3 - month and 6 - month operations, so as to facilitate the liquidity planning of banks. and we have reactivated operations that provide liquidity in us dollars, in coordination with the federal reserve and a number of other central banks, to prevent possible liquidity tensions. ii. the ecb ’ s securities markets programme let me now turn to the governing council ’ s decision to intervene in euro area debt securities markets, announced on 10 may following abrupt and very severe increases in financial market tensions throughout the world, but especially in europe. those tensions were spreading to a wide range of financial market segments, including the stock market, the interbank market and the foreign exchange market. it was observed that the epicentre of these tensions lay in european debt markets, in particular those for government debt. although the composition of the shocks that triggered the intensification of those tensions was different from that observed in october 2008 after the collapse of lehman brothers in the united states, this situation was comparable in terms of the suddenness of the change in sentiment and the abruptness of the flight to safety by international investors. overall volatility in markets increased sharply and liquidity conditions deteriorated significantly, not only in sovereign bond markets, but also to a critical degree in the money markets. transactions within the interbank market declined rapidly and uncertainty among banks about counterparties ’ creditworthiness increased. there