- state pillar 2 supervisory capital requirements. this means that, all things equal, capital requirements will not be increased further. hence, the banking sector can now conduct much better capital planning. moreover, in 2015, the banks under ecb supervision further increased profits relative to 2014. this allows banks to have appropriate distribution policies while still meeting regulatory capital requirements and buffers, and to support lending to the economy. in addition, the ecb ’ s monetary policy actions continue to support banks ’ financing conditions and, more broadly, economic activity. clearly, some parts of the banking sector in the euro area still face a number of challenges. these range from uncertainty about litigation and restructuring costs in a number of banks to working through a stock of legacy assets, particularly in the countries most affected by the financial crisis. there is a subset of banks with elevated levels of non - performing loans ( npls ). however, these npls were identified during the comprehensive assessment, using for the first time a common definition, and have since been adequately provisioned for. therefore, we are in a good position to bring down npls in an orderly manner over the next few years. for this purpose, the ecb ’ s supervisory arm is working closely with the relevant national authorities to ensure that our npl policies are complemented by the necessary national measures. the state of the euro area recovery and the role of economic policies against the background of downward risks emanating from global economic and financial developments, let me now turn to the economic situation in the euro area. the recovery is progressing at a moderate pace, supported mainly by our monetary policy measures and their favourable impact on financial conditions as well as the low price of energy. investment remains weak, as heightened uncertainties regarding the global economy and broader geopolitical risks are weighing on investor sentiment. moreover, the construction sector has so far not recovered. in order to make the euro area more resilient, contributions from all policy areas are needed. the ecb is ready to do its part. as we announced at the end of our last monetary policy bis central bankers ’ speeches meeting in january, the governing council will review and possibly reconsider the monetary policy stance in early march. the focus of our deliberations will be twofold. first, we will examine the strength of the pass - through of low imported inflation to domestic wage and price formation and to inflation expectations. this will depend on the size and the persistence of the fall in oil and commodity prices

mario draghi : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, before the hearing at the committee on economic and monetary affairs of the european parliament, brussels, 15 february 2016. * * * mr chairman, honourable members of the economic and monetary affairs committee, ladies and gentlemen, the first weeks of this year have shown that the euro area and the union at large face significant challenges. a strong effort by all policy makers will be needed in the months ahead to overcome them. i am therefore grateful to be back before your committee to discuss these challenges and how the ecb can contribute to tackling them. in my remarks today, i will address in turn the global economic context, recent financial developments and the state of the euro area recovery. i will conclude by briefly presenting our most recent decision to disclose the agreement on net financial assets – or anfa – as i know this topic is of concern to some of you. the state of the global economy let me start with the state of the global economy. in recent weeks, we have witnessed increasing concerns about the prospects for the global economy. activity and trade data have been weaker than expected, turbulence in financial markets has intensified and commodity prices have declined further. slowing growth in emerging market economies is a focal point for this uncertainty. in the early years of this century, many emerging economies expanded at a rapid pace. they benefited from increasing integration with the global economy and the tailwinds of buoyant financial markets. as these factors diminish, many countries have to adjust to a new reality. in several economies the slowdown has revealed and exacerbated structural problems which are increasingly restraining growth. a continuation of the rebalancing process is needed to secure sustainable growth over the medium term. this could imply some headwinds in the short term, which will require close monitoring of the related risks. one consequence of this adjustment is the divergence of economic cycles. while the recovery in advanced economies is gradually proceeding, the growth momentum in emerging market economies has weakened. weaker global demand has also contributed to the recent fall in the price of oil and other commodities, which in turn may have aggravated fiscal and financial fragilities in some commodity - exporting economies. countries that have suffered worsening terms of trade have seen a sharp decline in activity, while investment in their energy sectors has contracted. recent financial developments since early december, a general deterioration in