it suggests that the differentials originate from the fact that adjustment mechanisms in the euro area are not functioning as smoothly as they might and that policies other than monetary policy are not consistent with inflation rates close to the euro area average. thus, other factors are contributing to the inflation differentials within the euro area, including misaligned fiscal policies, wage dynamics not linked to productivity developments ( something reflected in the significantly different rates of growth in unit labour costs across the union ), and structural inefficiencies such as rigidities in product and factor markets. persistent differentials that result from these factors lead to a loss in competitiveness and cannot be considered benign. figure 8 indicates a strong positive relationship between average inflation rates in different euro area economies and the average growth of unit labour costs over the period since monetary union began. figure 8 : cumulative deviation of inflation and ulcs relative to euro area average ( 1999 - 2006, in percentage points ) - 5 - 10 - 15 be de ie gr es fr it inflation lu nl at pt fi ulcs source : bis database figure 9 : dispersion of real gdp growth rates within euro area ( 13 countries ), us ( 50 states and d. columbia ) and us ( 8 regions ) ( unweighted standard deviation in percentages ) 5. 00 ea13 4. 50 us50 us8 4. 00 3. 50 3. 00 2. 50 2. 00 1. 50 1. 00 0. 50 0. 00 source : us bureau of economic analysis and eu ameco database it is important to note that the process of nominal convergence from the early 1990s onwards, which culminated in the adoption of the euro, was not accompanied by a greater dispersion of real gdp growth rates. nor has dispersion increased following the adoption of the single currency. if any trend is discernable, it is a slight downward one, with dispersion remaining close to its historical average of around 2 percentage points, which is no greater than that found in the us. moreover, inflation and growth across the euro area appear to move together. those countries with higher than average inflation rates ( ireland, greece, spain, for example ) appear to have higher growth rates. this suggests that, to the extent that inflation differentials do not reflect differences in growth rates of productivity, the dampening effect of loss in competitiveness has been offset by other factors, such as interest rate decreases in the period up to the adoption of the euro, inflow

for inclusive finance reforms in accordance with local conditions and through targeted policies, and bring about greater progress in wider areas. in particular, it is necessary to explore reform and development paths for inclusive finance in underdeveloped regions. we should not only highlight the “ vanguard ” role of developed areas like zhejiang province, but also factor in the actual conditions and needs of underdeveloped areas to fully motivate them to actively and systemically draw upon the experience and practices of pilot zones. in this process, we must underline the role of locally incorporated banks, which, adhering to the principle of “ serving locals, msbs, agriculture, rural areas, and rural residents, ” should cultivate the local market with passion and affection to promote a generally even distribution of financial resources across the local region. ( 4 ) improving people ’ s livelihood and welfare and expanding the channels for offering financial services to key areas and key groups. the people ’ s livelihood is a key part of promoting common prosperity as well as a key target of inclusive finance. we should accelerate improving financial services for the elderly, the physically challenged, migrant workers, and college students ; effectively support key welfare programs such as pensions, education, medical care and employment ; promote entrepreneurship to increase income ; guide a reasonable consumption smoothing ; and explore providing financial support for tertiary distribution through services such as payment, settlement and charitable trust. we must also establish the concept of responsible finance, provide financial consumers with products and services that match their risk tolerance, adjust the threshold for financial products with lower risks, and enhance the inclusiveness of financial services, so as to create conditions for effectively increasing residents ’ property income. ( 5 ) promoting intellectual prosperity and continuously enriching its content by cultivating a good financial culture and improving the financial literacy of the whole population. financial culture emphasizes honesty and trustworthiness, spirit of contract, rational investment and a risk - based approach. it not only promotes material wealth, but also constitutes an organic part of intellectual prosperity. we must cultivate a positive and upright financial culture and strengthen the spirit of contract and integrity of each citizen. we should enhance the residents ’ and households ’ awareness of financial health. based on the wide coverage of inclusive finance at present, we should push forward the building of financial health to optimize the financial status of residents 3 / 4 bis central bankers'speeches and households, and stimulate their motivation and potentials for innovation and entrepreneurship, thus laying a more solid foundation among the public for