. so it ’ s all the more important that productivity grows. and that makes reforms necessary. 3 / 5 bis central bankers'speeches often productivity improves because of innovations. but for that, it ’ s vital that innovations spread. this occurs, for instance, through competition : new businesses, which can produce better and at lower cost thanks to innovative methods, squeeze out older companies. the economist joseph schumpeter called this “ creative destruction ”. for that to happen, the environment has to be right. in many countries, for instance, entrepreneurs still have to overcome major bureaucratic obstacles simply to set up a business. once they have done that, they need capital and labour in order to grow. that brings us back again to flexible markets, which can react to new and changing demand. and finally, businesses need markets on which they can sell their products. in that context, it is important to complete the common european market. that applies particularly to the digital market, which is set to become even more important in the future. growth and prosperity ladies and gentlemen, we need reforms for the economy in the euro area to grow sustainably. hardly anyone questions that. but is that the end of the debate? will people regain confidence in europe and in the euro when the economy is growing again? i think growth plays an important role, but we also have to look beyond that. theodore roosevelt said : “ the test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little ”. translated into the language of economics, it means : we must not only pay attention to growth but also to the distribution of the wealth it generates. compared with other regions, income and assets in western europe have traditionally tended to be quite evenly distributed. but as in many other countries, inequality is rising – and has been for decades. there are many reasons for this, ranging from rising unemployment, a larger number of single parents, reduced spending on education through to steady de - industrialisation. rising inequality is a complex phenomenon. some people therefore seek to explain it in simplistic terms by referring, for instance, to globalisation or european integration. that ’ s how we then have a link between the distribution of wealth and criticism of europe, as i mentioned at the start my speech. and indeed, studies are showing that there is a relationship : increasing inequality provides fertile ground for euroscepticism. and inequality is not a

covering the period to the end of october, the underlying money and credit expansion remains vigourous, even taking temporary factors into account, such as the flattening of the yield curve, the financial market turmoil and specific transactions associated with the restructuring of certain banking groups. therefore, monetary and credit developments continue to require very careful monitoring, not least with a view to better understand the response of the private sector to increased financial market volatility. thus far, there has been little evidence that the financial market turbulence since early august has strongly influenced the dynamics of broad money and credit aggregates. indeed, the expansion of loans to households and non - financial corporations has remained robust, which may suggest that the supply of credit has not been impaired. to develop a more complete view of the impact of financial market developments on bank balance sheets, financing conditions and money and credit growth, further data and analysis will be required. the ecb ’ s governing council stands ready to counter upside risks to price stability, in line with its mandate. against this background, on 6 december we decided to leave the key ecb interest rates unchanged. the governing council will monitor very closely all developments. in particular, for the recent increase in inflation to remain temporary, it is essential that the price and wage - setting behaviour remains unaffected by current inflation rates, so as to avoid the emergence of second - round effects. by acting in a firm and timely manner on the basis of its assessment, the governing council will ensure that such second - round effects and risks to price stability over the medium term do not materialise. to firmly anchor inflation expectations in line with price stability is even more important at times of financial market volatility and increased uncertainty. in this respect, the governing council will continue to pay great attention to financial market developments. monetary policy operations ladies and gentlemen, once the governing council has defined the monetary policy stance necessary for maintaining price stability in the medium term, in line with its mandate as defined by the treaty, the ecb has the responsibility to also ensure the smooth functioning of the segment of the money market that we influence. i should like to underline – once again – that these two responsibilities are clearly distinct and should not be mixed. since we last met in october, tensions continued to be observed and during the last period banks expressed concerns about their liquidity needs over the year - end. the new - year period is traditionally a period of scarce liquidity, as market activity is subdued and banks are preparing