•  Secondly, the emergence of a globalised market has quite naturally led to new developments in monetary policy instruments. The interest-rate instrument is overwhelmingly used to the detriment of quantitative and regulatory instruments. •  Lastly, these instruments serve converging strategies. The ECB’s monetary policy framework, for instance, is based on an analysis of growth in the monetary aggregate – the EMU reference value for M3 growth is 4.5% – combined with a wide range of economic and financial indicators to monitor inflationary risks. In such a context, monetary policy acts as a stabiliser. Monetary policy alone cannot guarantee the stability of financial systems, which may be jeopardised by shocks from both the financial and the real economies. However, it must be stressed that an adequate monetary policy is a fundamental prerequisite to a smooth functioning of the financial cycles. An appropriate monetary stance –both in terms of interest rate and money supply – is crucial for banks and monetary participants to base their decisions on solid ground. The objective of price stability lowers economic agents’ uncertainty regarding future price developments. In addition, by committing itself to a long-term objective, the central bank reduces market uncertainty, which can be a source of disruption to the financial economy. Interest rates and money supply are less volatile as a result, which is of benefit to the long-term growth of the economy. However, for financial systems to be stable, monetary policy must be consistent with the other aspects of economic policy, that is, fiscal policy and structural programmes.

•  Furthermore, we also decided that at least until the end of 2016, we will continue to fully meet the demand of banks for liquidity in our refinancing operations – of course, against adequate collateral. •  Finally, we have suspended the weekly operations to absorb the liquidity injected under the Securities Markets Programme. We took these decisions to enable our accommodative monetary policy stance to better feed through to the wider economy. Weak credit growth in the euro area, particularly to small businesses, has been a major headwind for the recovery. Indirectly, it has been a continuous drag on inflation over the recent past. In fact, despite significant reductions in policy interest rates and, overall, more contained macroeconomic risks, bank-intermediated credit growth remains subdued and lending rates for small businesses are well above the levels usually observed in similar phases of the business cycle. To address this challenge, our TLTROs are tailored to incentivise bank lending to the real economy in the euro area. The TLTROs will provide long-term funding to participating banks. This should ease their financing costs, allowing banks to pass on such attractive conditions  2  BIS central bankers’ speeches  to their customers. This will ease credit conditions and stimulate credit creation. Moreover, the growth of our balance sheet as a result of a significant take-up in our TLTROs will put downward pressure on interest rates in the money markets. This will contribute further to lowering the banking sector’s funding costs.