, including monetary policy operations, financial market instruments, and interbank and customer payments. last year, target2 processed a daily average of about 342, 000 payments, representing a daily average value of €1. 7 trillion. it therefore plays a key role in ensuring the smooth conduct of monetary policy, the correct functioning of financial markets and banking, and financial stability. by supporting financial integration and the implementation of our monetary policy, target2 represents a cornerstone of our monetary union. in the target2 system each eurosystem national central bank ( ncb ) has a debtor or creditor position ( a balance ) vis - a - vis the ecb, which keeps track of the money entering and leaving each participant country for accounting purposes. the target balances of individual ncbs therefore merely reflect the settlement of cross - border payments executed via target2. payments undertaken as part of the asset purchase programme are also settled via target2. app implementation is distinct from that of refinancing operations because it can entail immediate cross - border payments. indeed, around 80 % of total ncbs ’ purchases have been by financial market parties that are not resident in the same country as the purchasing central banks, thereby impacting target balances. moreover, the sellers of the assets purchased under the app can reinvest the proceeds, inducing a cross - border rebalancing of their portfolio. this phenomenon, referred to as international portfolio rebalancing, can prompt further changes in target balances, following the same logic i have just outlined. all this notwithstanding, we have seen target2 has been instrumental in the smooth passthrough of our monetary policy measures to the financing conditions of households and businesses. conclusions let me conclude. the eu treaties gave the ecb the primary objective of maintaining price stability in the euro area as a whole. this is the best contribution we can make to the welfare of our fellow citizens. ensuring price stability is a precondition for the euro area economy to achieve a balanced growth path that can be sustained in the long run. but this is not the only condition. achieving a balanced growth path also requires to strengthen the euro area ability to deal with 3 / 4 bis central bankers'speeches risks, whenever they will materialise. the current economic outlook provides a unique opportunity to reduce the likelihood of severe shocks by strengthening the economic structures of member states, with policy actions both on the fiscal and structural side. at the same time, boosting the resili

firms and households. since end - may 2014, bank lending rates for non - financial corporations, for instance, have fallen by around 120 basis points and those for households by around 100 basis points. lending rates for very small loans, which can be taken as a proxy for loans to small and 1 / 4 bis central bankers'speeches medium - sized enterprises ( smes ), have declined by almost 190 basis points. the significant improvement in funding conditions for smes is especially encouraging as they provide two - thirds of total private sector employment in the euro area. this improvement in financing conditions has been accompanied by reduced heterogeneity across countries in bank lending rates. for example, the difference between rates for firms in euro area countries most severely affected by the crisis versus the other countries has narrowed by around 100 basis points since mid - 2014. 2 despite the firm economic recovery, inflation dynamics have yet to show convincing signs of a self - sustained upward trend. headline inflation was 1. 4 % in october and is expected to temporarily decline towards the turn of the year, mainly owing to a weaker energy component as a result of base effects. underlying inflation pressures are still subdued as labour market slack remains significant. the improvements in labour markets that we have observed still need time to translate into more dynamic wage growth. the ecb ’ s recent monetary policy decisions in the light of this economic outlook, at our monetary policy meeting in october, we decided to recalibrate our monetary policy instruments. the re - calibration of our policies for the period beyond the end of this year is meant to preserve the degree of monetary stimulus that is still necessary to secure a sustained return of inflation rates towards levels below, but close to, 2 % in the medium term. let me briefly explain the four main decisions the governing council took. first, the improved outlook and our growing confidence in the gradual convergence of inflation rates towards our inflation aim allowed us to adjust the pace of our asset purchase programme ( app ). accordingly, we announced that, starting in january 2018, net asset purchases are intended to continue at a monthly pace of €30 billion until the end of september 2018, or beyond, if necessary, and in any case until the governing council sees a sustained adjustment in the path of inflation consistent with its inflation aim. second, as regards our re - investment policy, we stated that the eurosystem will reinvest the principal payments from maturing securities purchased under the app for an extended period of time after the