systems etc ) are also developed. 26. there is, however, a need to provide institutional support for those sectors that are complimentary to the banking sector success yet sufficient market mechanism has not taken roots. at the moment market development is limited in credit rating agencies, private sector credit information bureaus, and independent debt / financial advisories etc. the gaps in the rating agencies are of particular concerns for sbp, given the heavy reliance of standardized approach under basel ii. conclusion 27. central bank is now in midst of evaluating and stock taking of financial sector reforms. while the transformation of financial system is impressive, it is far from complete. not only is the change more visible in banking and equity markets relative to institutional finance as insurance and pension reforms have lagged and corporate debt market remains small, but the change is more fundamental in the banking relative to even equity markets. consequently it is no surprise that the banking system assets remain the larger component of financial asset and cater for bulk of financing requirements of the country. the banks also have been engaged in taking advantage of low hanging fruit and have leveraged lack of competition for resources and businesses to the best of their advantage. however, these trends are not sustainable as the economic and business cycles accompanied by changing interest rate environment eventually both global and based on domestic market fundamentals are a reality and call for the banks to be thinking of their long term interests. banking sector ’ s long term sustainability requires a more fundamental change accompanied by ( i ) greater degree of consolidation to provide a stronger and robust banking system ; ( ii ) a system that is well diversified and competitive ; ( iii ) stronger corporate governance and risk management aligned to principles of basel ii ; and ( iv ) financial system which is socially inclusive and facilitates access to financial services. although finance has help promote economic growth, but its contribution to providing access to finance to poor and disadvantaged region is limited.

yves mersch : challenges facing monetary policy in the euro area speech by mr yves mersch, member of the executive board of the european central bank, to the schweizerisch - deutscher wirtschaftsclub, frankfurt am main, 19 march 2018. * * * the euro area economy is recovering even faster than expected. many people are hoping therefore that monetary policy will soon become again “ more normal ”. in that context, the procedure for exiting from our purchase programme is linked to a precondition : that inflation moves into line with our objective in a sustainable way. we have become more confident that inflation is on the right track. so it ’ s only a question of time until we reach our goal. however, as we move in that direction we still need an expansionary monetary policy. but that does not mean that our specific monetary policy measures have to remain completely unchanged. the gradual exit from the purchase programme is confronting us, however, with certain problems : on the one hand, a too abrupt ending could lead to excessive market reactions. on the other hand, the effectiveness of the purchase programme is declining over time ; the side effects are increasing. to mitigate these risks, we need a credible exit scenario. background to the adjustment of the purchase programme first, let us look back on our adjustment of the purchase programme. in october last year, the governing council decided to reduce the purchases. on 8 march this year, the council confirmed that the net purchases, currently amounting to €30 billion per month, should be made until the end of september 2018. if necessary, the purchases can be extended beyond that until the governing council sees a sustainable correction of inflation in line with its definition of price stability over the medium term. the purchase programme was adjusted because of the expected higher price pressure based on the euro area ’ s strong and broad - based economic growth. its economy has now grown continuously for 18 quarters, with the relevant indicators pointing to continued strong growth. according to the projections made by ecb experts, the economy is expected to grow even slightly faster in the short term than previously expected. annual real gdp will increase by 2. 4 % in 2018, by 1. 9 % in 2019 and by 1. 7 % in 2020. compared with the december 2017 projections, the prospects for real gdp growth in 2018 have been revised upwards ; the outlook for the two years thereafter remains unchanged. overall, the risks to the growth prospects of the euro area are regarded as being