of 2003, though only slowly. at the same time, the growth of loans to the private sector has been edging up. both monetary and credit growth seem to be supported by the low level of interest rates prevailing in the euro area and may also reflect the improvement in the economic environment since the summer of 2003. given the strong m3 growth over the past few years, there is currently more liquidity in the euro area than is needed to finance non - inflationary growth. the effects of this high liquidity on inflation over the medium term will greatly depend on future developments in the economy and financial markets. should excess liquidity persist, it could lead to inflationary pressures over the medium term. to conclude, the economic analysis continues to indicate that the outlook for price developments in the medium term is in line with price stability. cross - checking with the monetary analysis does not alter this picture. let me also make a few remarks on other policies in the euro area. with regard to fiscal policies, the governing council sees continued reasons for concern. recent information indicates that significant imbalances are emerging in a growing number of countries and that current policies would not be sufficient to attain the consolidation objectives specified in the latest stability programmes. we strongly urge governments to take corrective action in a timely and sustained fashion, where and when necessary. finally, with regard to structural reforms, the governing council welcomed the presidency conclusions of last weekend ’ s brussels european council. structural reforms are necessary to meet the lisbon challenge and thus reap the benefits of higher sustainable growth and employment. as pointed out by the european council, the pace of reform needs to be significantly stepped up and the critical issue now is the need for better implementation of commitments already made. ending the political uncertainty and delays surrounding the implementation of sustainable fiscal policies and effective structural reforms would indeed support private sector confidence, which would add momentum to the economic recovery in the euro area, given the supportive stance of monetary policy. we are now at your disposal for questions.

peter praet : the future of global financial integration remarks by mr peter praet, member of the executive board of the european central bank, at the global research forum on international macroeconomics and finance, federal reserve bank of new york, new york city, 17 november 2016. * * * i would like to thank arnaud mehl for his contributions to this speech. i. backlash against financial globalization since the global economic and financial crisis financial globalization was a salient phenomenon of the past three decades, but since the financial crisis of 2007 – 2009 there are increasing signs of a backlash against globalization. the evidence for such a trend reversal is mixed. quantity - based measures of global financial integration, such as gross external assets relative to world output, have flattened out, and would merely point to a pause. flow measures provide a gloomier picture : international capital flows are now down to half their pre - crisis levels relative to world output, and are especially weak among mature economies. 1 internationally active banks have increased domestic lending faster than foreign lending. 2 several emerging markets have erected barriers to global finance and introduced controls against capital inflows and, more recently, outflows. price - based measures of global financial integration, meanwhile, present a different picture : international equity market co - movements, for example, remain strong. by some estimates, they remain as high as ever in more than a century. it is not just the extent of financial globalization, which might have changed since the financial crisis, though. its perceived benefits and costs in academic and policy debates have changed, too. before the crisis several studies already called for a “ reappraisal ” of the net benefits of financial globalization. 3 this has taken place along two main dimensions : ( i ) re - assessing the stability of capital flows, and ( ii ) re - examining whether financial integration leads to a productive allocation of savings and to agglomeration effects in certain geographic areas. as regards the first dimension, the notion that financial integration which is based on long - term instead of short - term capital flows is more resilient has become increasingly persuasive. for the second, it has been recognised that financial integration typically only delivers lasting positive effects on growth if countries meet certain thresholds of institutional development. 4 in the absence of sufficient institutional development, capital flows would most likely be used unproductively, feeding unsustainable lending booms and encouraging excessive short - term capital inflows. 5