of slowing in the coming months, the increasingly broad - based nature of inflation and inflation expectations moving above our 2 % target, the priority of our monetary policy is clear. we cannot influence the supply side shocks. however, our task is to strengthen confidence in the medium - term price stability and to prevent de - anchoring of inflation expectations through our credible action. these developments urge us to continue our journey down the path of monetary policy normalisation. in particular : first, the process of the gradual winding down of eurosystem net asset purchases will conclude this month, as we also end net purchases under the app, after the pepp net purchases already ended in march this year. second, as decided last week, our first interest rate increase in 11 years is scheduled for july, expected to be followed by another rise in september. while we intend to raise key interest rates in july by 25 basis points, the pace of further increases will depend on future price developments and outlooks. if the medium - term inflation outlook persists or deteriorates, a larger increase will be appropriate in september. third, based on our current assessment we anticipate that a gradual but sustained path of further increases in interest rates will be appropriate beyond september. high inflation is a major challenge for all of us, but we will make sure at the eurosystem level that inflation returns to our 2 % target over the medium term. [ financial fragmentation ] due to elevated inflation and the expected normalisation of our monetary policy, borrowing in the financial markets has become more costly for sovereigns, banks and corporates. similarly, the bank lending rates for households and corporates have also started to rise, though at a slower pace. since last august, the nominal sovereign bond yields have increased significantly. the increase, which gained pace in the last week, ranges from over 2 ppt for germany to over 4 ppt for greece. the spreads over german bonds have also increased notably, but remain far below the highest levels during the euro area debt crisis. a certain increase in spreads is justified, after their policy - induced compression over the last few years. however, if financial fragmentation were to become excessive, then this would endanger the proper transmission of monetary policy throughout the euro area. the primary tool of the eurosystem for mitigating excessive widening of the spreads is flexibility of reinvestments under the pandemic asset purchase program ( pepp ). flexibility can be used by investing the value of maturing

wound down, and the privatization of one state - owned bank ( nkbm ) has already been initiated. the new european resolution mechanism is scheduled to take effect in 2016. banka slovenije is seeking to speed up the process. it intends to create in 2015 a deposit insurance fund and a resolution fund to facilitate the consolidation of weak banks. the banking sector is undergoing a necessary process of structural reforms, and the world of banks is changing. regulation and supervision is being strengthened to make the future of the banking system more stable and less crisis - prone. on 4 november, the european central bank assumed responsibility under the single supervisory mechanism for supervising 8 banks in slovenia accounting for more than two - thirds of the market share. the supervisory culture will change under the new regime. supervision will become more quantitative and the ecb will also inspect the business models of banks. for the 10 credit institutions not covered under the ssm, banka slovenia will align its supervisory approach with that of the ssm. the central credit registry is being upgraded to support banking supervision. banka slovenije has established, like other european central banks, an institutional framework for macroprudential oversight of the financial system that is in line with the recommendations of the european systemic risk board. the basic aim is to safeguard the stability of the financial system by identifying the emergence of systemic risks at an early stage and taking preventive measures to mitigate these risks. * * * * bank rehabilitation is only a necessary condition for unlocking credit growth to the slovene economy. successful corporate restructuring, which entails both financial and business restructuring, is also essential to lay the foundation for productive investment and strong employment creation. unless enterprise restructuring is undertaken decisively in a timely fashion, the capital buffer of banks created by their recent recapitalization will erode and further injections will be needed once again. the enabling legislative framework for enterprise restructuring is in place, but systematic restructuring is yet to begin. this should be given priority by the government. a decision must be made with regard to the most urgent restructuring cases a critical constraint that slovenia faces is the availability of funding for corporate restructuring and increasing investment activities. given that the feasibility of using state resources for these purposes is limited, privatization and entry of private investors should be the key vehicles for the required non - debt capital infusion foreign direct investment is a key source of potential equity. the business and political culture will need to adapt and embrace the realities of globalization and slovenia ’ s integration