of the capital requirements directive iv. within the single supervisory mechanism ( ssm ), we will also have a single supervisory manual that will apply to all banks. this will cover issues like the methodology for the supervisory review and evaluation process ( srep ), off - site and on - site reviews, risk assessments and model validations. we are thereby ensuring that the same supervisory standards will be applied across banking union – and indeed, through harmonisation with the european banking authority, across the eu as a whole. in terms of decision - making, we are strengthening the centre by integrating the european and national levels of supervision. a particular innovation here will be the joint supervisory teams, which will contain staff from both the ecb and the national competent authorities. there will be one team for each significant banking group directly supervised by the ssm, operating under the management of a coordinator working for the ecb. this guarantees a collective approach and ensures that there will always be a european element in the decision - making. indeed, the final responsibility for decisions will rest with the ecb. this process of creating an integrated ssm is of course a major organisational challenge. we are bringing together 17 or more different national supervisors, with different operating cultures and supervisory philosophies, into a single mechanism with a single culture and philosophy. and the ecb will be directly hiring around 1, 000 new staff, of which around 750 will be involved in supervision. so it will take time to reach our cruising speed. with the ssm regulation foreseen to enter into force at the beginning of november, we are ready to publish the vacancy notice for the chair of the supervisory board, followed by those for the top management of the ssm – the four directors general of the main departments and the six deputy directors general. the vacancy notices for the middle management will follow a few weeks later, and then – in accordance with the cascade principle – the broad bis central bankers ’ speeches recruitment will begin. we need to be ready with the basic structure of the organisation for the asset quality review ( aqr ) towards the end of the first quarter of 2014. let me therefore briefly take this opportunity to describe how we foresee the ssm ’ s organisational structure. the ssm will contain four directorates general and a secretariat division. two of the directorates general ( dgs micro - prudential supervision i and ii ) will conduct the direct and day - to - day supervision over significant banks. the

low rather than too high. since the global financial crisis, the inflation rate in the euro area has on average been just 1. 2 % ( slide 2 ). in germany, it has been only slightly higher, at 1. 3 %. in the ten years before the introduction of the euro, inflation in germany had on average been more than twice as high. for most people, the dangers of too high inflation are immediately obvious. however, many do not understand why too low inflation may also pose risks to price stability. this is what i would like to briefly explain now. 3 in the past years inflation expectations in the euro area have declined markedly. this becomes clear when looking at financial markets, where such expectations are formed every day. just before the pandemic broke out, financial market participants were expecting an inflation rate of approximately just 1. 3 % in the euro area in the long term, which was significantly below our target of 2 % ( slide 6 ). lower inflation expectations largely reflected scepticism and doubts about the euro area ’ s longterm growth prospects, which had been gradually deteriorating in the years leading up to the pandemic. conditions in the labour market are testimony to this. some 13 years after the start of the global financial crisis, the unemployment rate in the euro area excluding germany is still higher than in 2008, before the financial crisis ( slide 7 ). a high level of structural unemployment dampens aggregate demand and leads to a situation where many firms are less profitable because they cannot pass through increased costs to their customers. this, in turn, pushes inflation down. wage increases are then lower, too, and people 2 / 9 bis central bankers'speeches spend less on goods and services, creating a vicious circle. demographic change threatens to further exacerbate these issues in the future. in germany, the labour force is expected to shrink by almost 12 % by 2035 ( slide 8 ). an ageing population weakens expected future demand and may discourage firms from investing in innovative and efficiency - boosting technologies. in the 1980s, annual productivity growth in the euro area was 2 %. it has more than halved since. these trends hurt economic growth and employment and they reduce monetary policy ’ s precious room for manoeuvre in a crisis. this is linked to the two key determinants of nominal interest rates : expected long - term growth and inflation expectations. if they fall, so do interest rates. this is exactly what we have