challenges ahead. advancing cmu should be a critical political project for the new european commission. it should go hand in hand with strengthening the resilience of the non - bank financial sector as it consolidates its importance in financing the eu's real economy. at the same time, europe remains primarily bank - based. and completing the banking union remains a priority. a single capital market needs to come in addition to, and not 3 / 4 bis - central bankers'speeches instead of, a complete banking union. setting up edis should be high on the agenda in the next eu legislative term. it is essential for depositor confidence and for ensuring a level playing field for banks. both the capital markets union and the banking union should be viewed within the broader context of the european project. enrico letta's recent report2 rightly considers the single market as central to financing strategic goals, competitiveness and the future of the eu. removing existing barriers within the market for goods and services and advancing in the three strategic sectors that were previously excluded from the single market – namely financial services, energy, and telecommunications – will allow us to benefit from the full scale of the market. the single market for goods and services is essential to attract investment, make our economic and monetary union more resilient and support the eu's role as global player on the international stage. at the same time, state aid procedures must guarantee a level playing field and be compatible with the single market. lastly, a permanent eu central fiscal capacity remains essential to the european project. it would enable us to tackle geopolitical and economic challenges more effectively. and by supporting investment in strategically important areas, generating economies of scale and raising productivity across the bloc, it would help to improve the welfare of european citizens while further enhancing financial integration in the eu. 1 ecb ( 2024 ), statement by the ecb governing council on advancing the capital markets union, 7 march. 2 letta, e. ( 2024 ), " much more than a market : speed, security, solidarity – empowering the single market to deliver a sustainable future and prosperity for all eu citizens ", institut jacques delors, france, 27 april. 4 / 4 bis - central bankers'speeches

growth in the euro area, which slowed in the second quarter of 2011 to 0. 2 % quarter on quarter, is expected to be very moderate in the second half of this year. there are signs that previously identified downside risks have been materialising, as reflected in unfavourable evidence from survey data. looking forward, a number of factors seem to be dampening the underlying growth momentum in the euro area, including a moderation in the pace of global demand and unfavourable effects on overall financing conditions and on confidence resulting from ongoing tensions in a number of euro area sovereign debt markets. at the same time, we continue to expect euro area economic activity to benefit from continued positive economic growth in the emerging market economies, as well as from the low short - term interest rates and the various measures taken to support the functioning of the financial sector. in the governing council ’ s assessment, the downside risks to the economic outlook for the euro area are confirmed in an environment of particularly high uncertainty. downside risks notably relate to a further intensification of the tensions in some segments of the financial markets in the euro area and at the global level, as well as to the potential for these pressures to further spill over into the euro area real economy. they also relate to the impact bis central bankers ’ speeches of the still high energy prices, protectionist pressures and the possibility of a disorderly correction of global imbalances. with regard to price developments, euro area annual hicp inflation was 3. 0 % in october according to eurostat ’ s flash estimate, unchanged from september. inflation rates have been at elevated levels since the end of last year, mainly driven by higher energy and other commodity prices. looking ahead, they are likely to stay above 2 % for some months to come, before falling below 2 % in the course of 2012. inflation rates are expected to remain in line with price stability over the policy - relevant horizon. this pattern reflects the expectation that, in an environment of weaker euro area and global growth, price, cost and wage pressures in the euro area should also moderate. the governing council continues to view the risks to the medium - term outlook for price developments as broadly balanced, taking also into account today ’ s decision. on the upside, the main risks relate to the possibility of increases in indirect taxes and administered prices, owing to the need for fiscal consolidation in the coming years. in the current environment, however, inflationary pressure should abate. the main