improved and the level of npls lowered, as they weaken the impact of the monetary impulses on productive activity. furthermore, there are still no firm signs that inflation has moved onto a rising trajectory drawing it permanently closer to our objective of 2 %. this can be seen in the measures of core inflation, which strip out the more volatile components of prices and which are sound indicators of the latent inflationary pressures in the economy. these measures of inflation have remained anchored around 1 % over the last three years. behind this inflationary behaviour are, among other factors, highly contained wage growth in the euro area as a whole – and i insist, the euro area in its entirety – that contrasts with the improvement in employment. compensation per employee has sustained increases of close to 1. 2 % since mid - 2014, far below its historical average which is at slightly over 2 %. this fact has attracted the attention of analysts, who point to the confluence of various factors to explain why the response by wages to the fall in unemployment is not following the usual patterns. first, it is pointed out that the number of workers who are employed part - time, involuntarily, increased notably after the crisis and has scarcely fallen with the improvement in economic activity. 5 / 7 in parallel, there has also been an increase in the weight of some groups that are not included in the habitual definition of unemployment, such as economically inactive individuals whose reason for not seeking a job is because they believe they will not find one ; or who do not seek a job for whatsoever reason, but are available and wish to find a job ; or who, although they are seeking employment, are not available to immediately take up a new job. the measure of the unemployment rate that were to include these groups would, for the euro area as a whole, stand at around 18 % of the labour force, practically double the habitually estimated rate. in terms of their influence on wage bargaining, these workers could exert downward pressure on wages. additionally, the excess supply of unskilled labour, which in some cases is amplified by immigrant inflows, may also reduce upward pressure on wages ; and, moreover, there is some evidence of changes in wage - setting mechanisms which, against a background of low growth in prices, would be setting greater store by past or actual inflation, as opposed to expected inflation. true, this situation also arises in other developed economies that are ahead in the cycle, as is the case of the

therefore, progress towards a capital markets union should be accelerated. undoubtedly, a first step towards integration is to work on the convergence of regulatory and supervisory frameworks and towards a single financial culture. 4 / 6 bis - central bankers'speeches turning back to the banking sector, another aspect to consider is cross - border mergers. not forgetting the neutrality that authorities must maintain, we must also recognise that the absence of notable examples of cross - border mergers in the european monetary union is an anomaly. such operations would bring benefits such as greater diversification and potential efficiency gains related to larger size. so why haven't they occurred before now? i believe that the conditions for banks – which are the ones that need to propose and analyse the potential business case – have not yet been met. there are still certain regulatory divergences in europe : different insolvency regimes, transaction costs and banking product cultures that have prevented any notable examples of cross - border operations to date. having large paneuropean banks on an international scale would probably make it easier for our large companies to raise finance more competitively for their international activities. but this point also leads me to raise another question : do we want " pan - european banking champions " at any cost? the answer is'no '. bigger isn't always better. every operation must be based on careful analysis of the specific benefits it would entail, which in any case should outweigh the associated costs and risks. the resulting business model must be profitable and sustainable as a result of the synergies that the current regulatory framework does not provide to our institutions to grow beyond the national borders. therefore, i would like to emphasise, once more, the importance of continue building the foundation of a truly common regulatory framework in europe for the shake of our own interest. our financial system, our companies and economy need to be stronger to compete at international level. finally, in relation to supervision, i'd like to stress that improving the governance and functioning of the economic and monetary union would significantly reduce the vulnerability of the european financial system. specifically, creating a fully mutualised european deposit insurance scheme would boost citizens'and markets'confidence and contribute to greater risk - sharing within the euro area, thereby reducing the potential for fragmentation episodes. in the meantime, the crisis management and deposit insurance package improves the current rules to better protect taxpayers from the costs of bank failures. in conclusion, the european banking system is well positioned. we can consider it robust