the smooth functioning of money markets, while the latter support the provision of medium - term credit to the real economy. for many companies, the lockdown measures have meant a rapid decline in revenues, while their expenses ( such as rents, wages or bills to suppliers ) still fall due. in order to avoid viable firms going out of business for lack of liquidity, it is important that banks provide sufficient credit. early evidence from monetary aggregates shows a very large increase in money growth in march : the annual growth rate of the broad monetary aggregate m3 stood at 7. 5 percent, 2 percentage points higher than in february ( chart 13 ). this is by far the largest monthly increase since the creation of the euro. in absolute terms, the monthly flow was €323 billion. for comparison, the largest monthly flows until now were recorded in march 2007 and october 2008 at around €120 billion. https : / / www. ecb. europa. eu / press / key / date / 2020 / html / ecb. sp200519 ~ e5203d3520. en. html 9 / 14 5 / 19 / 2020 pandemic central banking : the monetary stance, market stabilisation and liquidity similar developments were observed in the narrow monetary aggregate m1. this aggregate continues to drive money developments, reflecting the persistently low remuneration environment and the current high level of economic uncertainty. the annual growth rate of m1 increased to 10. 3 percent, up from 8. 1 percent in february ( chart 13 ). chart 13 developments in m1 and m3 ( annual percentage changes ) source : ecb. notes : monthly data. the latest observations are for march 2020. lending to the private sector was the single largest source of money creation in march, driven by loans to firms. the annual growth rate of loans to firms increased to 5. 4 percent in march, up from 3. 0 percent in february ( chart 14 ). by contrast, the annual growth rate of loans to households moderated somewhat : it declined to 3. 4 percent, down from 3. 7 percent in february. the very different lending flows between firms and households in march reflect the nature of the policy approaches to supporting these two sectors. in the case of firms, policy support has been mainly channelled via the banking sector, largely in the form of government - guaranteed credit and central bank measures to support credit. by contrast, direct fiscal support in the form of automatic stabilisers such as unemployment benefits

. the tpi made a decisive contribution by ensuring a smooth transmission and was thus a prerequisite for being able to resolutely tackle the inflation problem. self - reinforcing interest rate spirals run counter to the objective of price stability. the design of the programme ensures that the disciplining effect of financial markets is not undermined. in the coming years, a future - proof fiscal policy will be a prerequisite for safeguarding the independence of monetary policy. fiscal consolidation in line with the new european fiscal rules, while prioritising investment in the future, is essential to safeguard long - term growth and price stability. thank you for your attention. annexes 7 june 2024 slides 1. see also schnabel, i. ( 2020 ), “ the shadow of fiscal dominance : misconceptions, perceptions and perspectives ”, speech at the centre for european reform and the eurofi financial forum on “ is the current ecb monetary policy doing more harm than good and what are the alternatives? ”, 11 september. 2. ecb ( 2021 ), monetary policy statement, 16 december. 3. see reis ( 2023 ), “ what can keep euro area inflation high? ” economic policy 38 ( 115 ), november. see also bianchi, f. and melosi, l. ( 2022 ), “ inflation as a fiscal limit ”, federal reserve bank of chicago working paper, no 2022 - 37 ; cochrane, j. ( 2022 ), the fiscal theory of the price level, princeton university press. 4. see ecb ( 2024 ), financial stability review, may. 5. schnabel, i. ( 2024 ), “ the benefits and costs of asset purchases ”, speech at the 2024 boj - imes conference on “ price dynamics and monetary policy challenges : lessons learned and going forward “, 28 may. 6. ecb ( 2024 ), “ who buys bonds now? how markets deal with a smaller eurosystem balance sheet ”, the ecb blog, march. 7. schnabel, i. ( 2022 ), “ united in diversity – challenges for monetary policy in a currency union ” speech to the graduates of the master program in money, banking, finance and insurance of the pantheonsorbonne university, paris, 14 june. 8. ecb ( 2022 ), the transmission protection instrument. 9. ecb ( 202