which are closer to the single monetary policy. while the euro area banking markets for wholesale and capital market - related activities show clear signs of increasing integration since the introduction of the euro, the retail banking segment has remained more fragmented, leaving european consumers unable to take full advantage of the benefits of the emu and the single market. 4 • while there has been progress in the implementation of structural reforms in europe, the catalyst role of emu in improving europe ’ s growth potential has not yet been fully exhausted. the lacklustre performance in many euro area countries is rooted not in deficiencies in the current institutional framework, but rather in some national governments ’ lack of willingness to implement structural reforms. the reasons why politically motivated governments tend not to implement sufficient structural reforms are by now well known. structural reforms typically have positive, long - term effects, which can be difficult to ascertain in advance, but often negative short - term effects that are relatively more visible to voters. • it has sometimes been argued that some macroeconomic stimulus from aggregate demand policies might help foster the implementation of structural reform packages by offsetting potential short - term costs of reforms. this idea that there could be a trade - off between structural reforms and macroeconomic accommodation is disputable, notably in the emu. such accommodation could be provided either by monetary policy or fiscal policy, which i will now discuss in turn. • in the emu monetary policy is not the appropriate tool for mitigating the potential shortterm costs of structural reforms or for providing incentives for reforms at the national levels. first, reform needs differ across euro area countries and the single monetary policy is by its very nature unable to mitigate the potentially different short - term countryspecific costs of reforms. second, there are well - known and overwhelming implementation problems of ex ante coordination between policy makers with different objectives. this typically gives rise to incentive distortions for the policy actors involved. an immediate consequence of any attempt to seek closer coordination with the ecb would be a blurring of responsibilities, which would lead to every institution being made responsible for everything, which in the end would mean that, amid confusion, no institution was responsible for anything, and no successful reform implemented. • price stability is the best contribution monetary policy can make to structural reforms in europe. by improving the quality of relative price signals, our price stability - orientated monetary policy makes it easier for policy makers and european citizens to identify the areas in which structural reforms are most needed

reviving. this is supported by businesses adapting to new conditions, and the launch of the " grain corridor ". on the other hand, economic recovery is restrained by logistical problems, destruction of production facilities, a decrease in real household income, and weaker performance of agriculture. as a result, gdp will fall by around 32 % this year. in 2023 - 2024, the economy will recover gradually at a pace of 4 % a€ “ 5 % a decline in security risks from the middle of 2023 assumed by the forecast will be the key factor in the future economic recovery. moreover, large budget support will boost consumer demand and investment in the reconstruction of the country. significant losses of labor force and production capacity, high global energy prices, and large import needs in the period of post - war reconstruction will be a drag on economic recovery. the current account of the balance of payments will move back into deficit in the coming years. on the one hand, international financial assistance in 2023 - 2024 is expected to be large. the improvement in security assumed in the forecast will favor further growth in exports, and remittances from labor migrants will not be lower than before the war. on the other hand, the reconstruction of the country will require large volumes of imports. moreover, migration will remain strong as security risks persist. 2 / 4 bis - central bankers'speeches cooperation with international partners remains an important factor for reviving the economy and post - war recovery. support by our official partners remains a critically important source for replenishing the budget. it will also enable the nbu to maintain its international reserves at a sufficient level, keep expectations under control, and to safeguard financial stability. the key assumption of the forecast is that security risks will start to decline significantly from mid - 2023. the nbu has revised its key assumption of the security situation forecast. therefore, the full unblocking of sea ports, reductions in ukraine's risk premiums, and an increase of investment in the restoration of the country have been delayed in our forecast. if the full - scale war lasts longer than is envisaged in the baseline scenario of the current forecast, the ukrainian economy will recover at a slower pace, while inflation will higher than currently expected. other risks are also relevant for the forecast. when realized, most of these risks could worsen inflation dynamics and hold back economic recovery. specifically : despite a certain easing, the risk of state finances becoming unbalanced persists on the