Besides, we are working on revitalising market-based financing in the euro area, notably through the revival of a transparent, robust and efficient securitization market; this has the potential to provide a useful complement to credit, the ultimate objective being, of course, the healthy financing of the euro area recovery. BIS central bankers’ speeches  1  In this context, of course, the key question at the heart of current debates is: how can we amplify this recovery? I believe that, fundamentally, what Europe needs in order to strengthen its pace of growth is to improve its competitiveness in today’s globalised world. Obviously, the euro area is not without its strengths, and the region is well-equipped to face the challenges of the 21st century. With 370 million consumers and a high level of purchasing power, it is still the largest market in the world. It is also the world’s most economically integrated zone, with a highly qualified labour force and extremely good infrastructure. Besides, we have achieved considerable improvements in our economic governance and are continuing to make progress in this area with the implementation this year of the single supervisory mechanism, which will be followed by a single resolution mechanism, as announced by the European Council of Ministers in March. This banking union is absolutely key to the strengthening of the euro area.
The ECB staff macroeconomic projections foresee annual real GDP increasing by 1.2% in 2014 and 1.5% in 2015. In addition, the majority of soft indicators are improving, and have been above their long-term average for a number of months now, confirming a rebound in economic activity. Although the strength of the rebound varies across countries, it is important to highlight the return to positive growth in those countries most affected by the crisis and which are of major importance to the euro area: I’m thinking above all of Spain and Italy, where exports have rebounded sharply and are currently driving economic activity. On a financial level, we are also seeing a significant return to normal in the euro area: •  bond markets in periphery countries are continuing to stabilise and interest rates have come back down to sustainable levels, with several periphery countries or programme countries recently managing to obtain market financing at perfectly satisfactory rates;  •  fragmentation within the euro area is decreasing – as shown for example by the fall in liquidity surpluses or Target2 balances;  •  credit dynamics are still subdued on the whole, due to continuing weak demand and ongoing bank deleveraging. But we are confident that the asset quality review which we are undertaking and the upcoming stress tests will revive confidence and thus boost credit.