2000 - 2005 ( compared with rates of 2. 0 % and 2. 6 %, respectively, in the us ). one important factor constraining euro area productivity growth has been the slowdown in capital deepening. as you know, capital deepening is the increase in the volume of capital per unit of labour input. during the last decade the contribution to growth from capital deepening in the euro area was below that observed in the early 1990s, and significantly below that in the us. at a more disaggregated level, recent studies have highlighted the role of the information and communication technology ( ict ) in explaining the acceleration of productivity growth in the us in the mid - 1990s. we have all witnessed the profound change of the economy in the domain of the production of goods and services that has been brought about by lower costs of computing and communicating information. overall, the different incorporation in the economy of the ict revolution helps explain the diverging trends in labour productivity growth between the euro area and the us in recent years in two ways. first, we observe lower productivity growth in the ict - using sectors in the euro area compared with the us. in particular, key ict - using services, such as retail, wholesale and financial services, missed out to raise productivity growth in recent years in the euro area. the deceleration in labour productivity in these sectors seems primarily related to strong employment growth, which reduced the pace of capital deepening. second, ict - producing sectors have made a smaller contribution to overall labour productivity growth in the euro area compared to the us ( approximately 0. 5 percentage points between 1996 and 2002 in the euro area, compared with 0. 8 percentage points in the us during the same period ). this can be in part attributed to a relatively small output share of the ict - producing sector of 5. 3 % in the euro area, compared with 7. 0 % in the us. the latest empirical studies have found evidence that economic growth is associated with the degree of development and structure of the financial system. well - developed financial systems help to channel resources towards the most rewarding activities and therefore encourage the most efficient allocation of capital. a further development of the euro area financial system can be achieved via deeper financial integration. in this regard, one requirement for increased cross - border financial flows is the establishment of pan - european payment systems. the banking payment system put in operation at the same time the euro was introduced – target – has successfully linked up all national payment systems

feeding into price and wage setting in a more persistent way. what is clear is that our monetary policy measures have been successful in avoiding a deflationary spiral and securing the anchoring of inflation expectations. in the past, as interest rates approached zero, some did question our ability to add sufficient accommodation to combat a prolonged period of too - low inflation. we answered those doubts by demonstrating that we would take any measures necessary within our mandate to deliver our mandate, and that those measures were effective in further easing financial conditions. deflation risk premia, which had been growing in 2014 and 2015, have now been more or less priced out of market - based inflation expectations. that being said, a prolonged period of low inflation is always likely to be exacerbated by backward - lookingness in wage and price formation that occurs due to institutional factors, such as wage indexation. this has plainly happened in the euro area. ecb analysis finds that, compared with long - term averages, low past inflation dragged down wage growth by around 0. 25 percentage points each year between 2014 and 2016. the evidence as to whether backward - lookingness has increased recently is mixed. there were signs that indexation had fallen in the early part of the crisis, and ecb empirical estimates 4 / 7 bis central bankers'speeches suggest that the weight of past inflation in current inflation has decreased. yet there is also evidence that indexation has returned in some large euro area countries. in italy, for example, backward - looking indexation of wages now covers around one - third of private sector employees. 7 still, even if indexation rose, it would only create inertia in price formation : it would not obstruct the transmission process. as economic slack shrinks, upward pressure on prices will materialise and gradually enter the indexation ratchet. so once again we see temporary forces at work that should not affect medium - term price stability. and this assessment is broadly what we see in market - based inflation expectations today. interpreting with some caution, they are now consistent with the picture that our policy is effective, but that its full effects will take time to materialise. accompanying the recovery so what do these various explanations imply for our monetary policy stance? the first point to make is that we face a very different situation today from the one we encountered three years ago. then, we also faced global shocks and significant labour market slack. but the recovery was still in its infancy. global growth was slowing,