further signs of moderation. whereas in previous months this moderation reflected a decline in the growth rate of household borrowing in an environment of rising mortgage lending rates throughout the euro area and a slowing increase in house prices in some regions, in february it was due to a moderation in the growth of loans to non - financial corporations. when assessing such developments, it should be borne in mind that monthly figures can be influenced by temporary factors and should thus not be overstated. indeed, the strong growth in private sector credit reflects the continuation of the strong trend in the growth of borrowing by non - financial corporations seen since mid - 2004. when put in perspective, the latest data continue to point to vigorous dynamics in the underlying rate of broad money expansion in the euro area. the continued robust expansion of money and credit reflects the low levels of interest rates over a prolonged period of time and the strengthening of economic activity in the euro area. rising short - term interest rates, in combination with low long - term interest rates, have had an impact on developments in the individual components of monetary and credit aggregates, but have thus far had only a limited influence on the overall strength of monetary developments. following several years of robust monetary growth, the liquidity situation in the euro area is ample by all plausible measures. in this environment of ample liquidity, the continued vigorous expansion of money and credit points to upside risks to price stability over the medium to longer term. monetary developments therefore continue to require very careful monitoring, particularly against the background of a solid expansion in economic activity and continued strong property market developments in many parts of the euro area. to sum up, in assessing price trends it is important to look through any short - term volatility in inflation rates. the relevant horizon for monetary policy is the medium term. risks to the medium - term outlook for price stability remain on the upside, relating in particular to stronger than currently expected wage developments in a context of ongoing robust growth in employment and economic activity. given the vigorous monetary and credit growth in an environment of already ample liquidity, a cross - check of the outcome of the economic analysis with that of the monetary analysis supports the assessment that upside risks to price stability prevail over the medium to longer term. accordingly, the governing council will continue to monitor very closely all developments. indeed, it is essential to ensure that risks to price stability over the medium term do not materialise. this will support the solid anchoring of medium to longer - term inflation expectations

is truly european, while other important parts of economic policy are still handled at the national level. first, the euro area is exposed to shocks arising from global shocks or common vulnerabilities. the 2007 – 08 financial crisis and its aftermath were a case in point, causing growth to go into negative territory in all euro area countries in 2009. what made the euro area different from other economies was the absence of a readily available area - wide fiscal capacity to complement monetary policy. moreover, the lack of a robust regulatory, supervisory and crisis management framework when the crisis hit gave rise to increased doubts in the solidity of the european banking system. this in turn affected the financing of the real economy and the transmission of monetary policy. second, as we have seen in the past crisis, the euro area can be exposed to the risks originating from unsustainable domestic policies resulting in excessively high levels of debt, financial sector vulnerabilities and / or a lack of competitiveness. through financial, confidence and trade channels, these risks can spill over to other countries which have similar fragilities or strong interlinkages with the country where the risk originated. such policies can also fragment economic and financial conditions, thereby hampering the homogeneous transmission of our single monetary policy across the euro area. and unsustainable policies eventually force socially painful and financially costly economic adjustments which can undermine cohesion in emu. in other words, an incomplete emu impacts the economic and financial environment in which we conduct monetary policy. 2 / 4 bis central bankers'speeches europe has learned this lesson the hard way. and we have made significant progress in fixing the gaps in emu ’ s architecture. for instance, we now have a much stronger and more integrated framework for financial regulation, supervision and crisis resolution. you played an essential role in bringing this about. and the framework has also helped contain any financial stability risks that may emerge during a long period of low rates. but more progress can and should be made. i would like to mention three areas where work is still needed. first, an effective system for policy coordination is vital for promoting sound national policies, thus reducing the domestic sources of such shocks and increasing countries ’ shock - absorption capacity when they materialise. this pertains to promoting sound economic and fiscal policies. for that, we need to rekindle faith in our common rules and ensure that they are respected. additional support from the eu level, as recently proposed by the european commission, could