competences to deal with crises such as the covid - 19 pandemic. citizens clearly look to the eu for answers and you play a central role in ensuring that such answers are forthcoming. the measures adopted thus far by national governments and the european institutions are reinforcing our policies. at the same time, our policies are creating the most favourable conditions for the full impact of structural and fiscal policies to be felt. the parliament ’ s calls for an ambitious european response were heard by european leaders. it 3 / 4 bis central bankers'speeches will now be important to ensure that the next generation eu funds are used not only in a timely fashion, but also in a way that enhances long - term growth and supports common eu objectives. if we get it right, next generation eu could be just the game changer that europe needs – in terms of modernisation, resilience and prosperity. 1 dossche, m. and zlatanos, s. ( 2020 ), “ covid - 19 and the increase in household savings : precautionary or forced? ”, economic bulletin, issue 6, ecb. 2 ecb staff macroeconomic projections for the euro area, september 2020. 3 fraccaroli, n. et al. ( 2018 ), “ the evolution of the ecb ’ s accountability practices during the crisis ”, economic bulletin, issue 5, ecb. 4 introductory statement by christine lagarde, president of the ecb, at the econ committee of the european parliament, brussels, 6 february 2020. 5 available on the ecb ’ s website. 6 see “ ecb proposes to reduce reporting burden for banks and increase data quality ”, press release, 21 september 2020. 4 / 4 bis central bankers'speeches

and medium - sized enterprises, which account for about three quarters of corporate employment in the euro area. it is against this background that we decided to launch the three - year ltros. their objectives have been broadly met. the april bank lending survey points to a marked decline in the net tightening of credit standards and a general improvement in banks ’ funding conditions. this evidence is bis central bankers ’ speeches supported by a range of market and other indicators. overall, it confirms that supply side constraints on bank credit have been removed. this has been a very important result. the full supportive impact of the three - year ltros needs time to unfold, so it is too early to draw firm conclusions about the behaviour of a single variable – namely, bank credit to the private economy – that is influenced by a multitude of factors. in the current environment of very weak credit demand and heightened risk aversion, a rebound in the volume of credit will be particularly slow. yet granular balance sheet data indicate that in february and march, banks domiciled in stressed constituencies could interrupt and partly reverse the sustained decline in loans over the previous months. indeed, smaller banks in some of those countries could increase their supply of loans. inflation expectations remain well anchored and there is no inflation risk in any euro area country. financial market - based inflation expectations over a ten - year horizon are consistent with our definition of medium - term price stability. and should risks to price stability emerge, the eurosystem has sufficient tools at its disposal to absorb excess liquidity. the second point i would like to highlight as a way of understanding the ecb ’ s current conduct of monetary policy is heterogeneity. the situation regarding economic growth is quite different across the euro area. this is not the first time ; we had clearly diverging cycles ten years ago. at that time, growth in germany was very low and growth in other countries was buoyant. this is part of a normal degree of cyclical heterogeneity that we observe in very large continental economies. it is very similar to what we observe in terms of cyclical heterogeneity within the united states. what is new in the current episode is the parallel fragmentation of financial markets. this first concerns the interbank market, which works almost exclusively on a national, collateralised and very short - term basis. it is also true for broader capital markets and private capital flows, where home bias is rising. the prime reason for the current