instruments. in combination these measures have enabled central banks to create accommodative financial conditions, greatly enhancing the transmission of monetary policy. however, in the world of rapid transformation, it seems sensible to think that central banks should evaluate their monetary policy frameworks time to time. regular review would also make the strategy more open and transparent. it is also important that the central bank does not act in a way that does not reflect announced long - term policy goals. 5 / 6 bis central bankers'speeches many central banks already have an evaluation process in place. the bank of canada is one example of such practice. the federal reserve system also has a procedure in place for strategy review. the same is true for the bank of england and the swedish riksbank. the evaluations could be internal or made partly by outside evaluators. the background papers supporting evaluation could be made public. the ecb would benefit from considering its strategy work in this perspective. regular reviews would assist the ecb to stay in tune with the rapidly changing economic and financial environment. especially in our present times of uncertainty, it is essential for any central banker to possess a fully modernized monetary policy toolbox that is as functional and as effective as possible. that would help “ the fox ” to outsmart the opposing forces and overcome the immediate obstacles, and enable “ the hedgehog ” to stay the course of medium - term price stability, sustained growth and high employment. so why not pursue it? many thanks for your attention, and welcome to the seminar. 1 michaela schmoller, secular stagnation : a false alarm in the euro area? bank of finland bulletin 4 / 2018. 2 brainard, william, uncertainty and the effectiveness of policy. american economic review, 57 ( may ), 411 – 25. 3 peter praet, economic policymaking under uncertainty. speech at the caixa, madrid, 17 october 2018. 4 e. g. a broad study by banco de espana concluded that in the united states, the range is from – 3 %. to 5 %. similarly, holston, laubach and williams, leading names in this area of research, estimate that the confidence band around their estimates of the natural rate for the u. s. is currently around 5 percentage points. 5 for further discussion on the state of the phillips curve, slack in the economy and inflation expectations, see e. g. www. bofbulletin. fi / en / 2018 / 1

approach is particularly appropriate in the current world of significant uncertainties, which requires a steady but creative hand from the makers of monetary policy. from this point of departure, today, let me focus on the challenges of monetary policy normalisation and framework over the medium term. the ecb monetary policy and gradualism slide 2. euro area gdp in 2008 - 2020 1 / 6 bis central bankers'speeches despite some moderation following the strong growth performance in 2017, the euro area economy continues to expand at a rate estimated to be higher than its long - run potential growth rate. there has been good progress in the labour market, and over 9 million jobs have been created during the recovery since 2013. the underlying strength of the economy should support the convergence of inflation to our price stability target. despite the anticipated winding - down of the eurosystem ’ s net asset purchases, the monetary policy stance of the european central bank remains very accommodative, which is still needed to support achieving our price stability target in a sustained manner over the medium term. in this, in many ways benign situation, monetary policy makers are bound to take decisions in the world of uncertainties. today ’ s concrete uncertainties stem from the continued trade tensions, vulnerabilities in the emerging market economies and financial market volatility. they are amplified by analytical uncertainties related to the functioning of the economy and the operation of economic theories, which we use daily in formulating our policies. these uncertainties are related to e. g. the prospect of secular stagnation, the assessment of the natural rate of interest, and the slope and movements of the phillips curve. we will hear michaela schmoller ’ s presentation about the issue of secular stagnation shortly. 1 a corollary from these factors is the additional question : what is the impact of these uncertainties on central banks ’ strategies? after a decade of exceptional measures, prospects for returning to a more conventional interest rate environment and a more normal eurosystem balance sheet have slowly strengthened. a watchword in the discussion on normalisation is gradualism. gradualism has been defined as the central bank tending to adjust the interest rates ( and, in the present context, its other instruments ) incrementally, in a series of gradual steps in the same direction. theoretically, this cautious approach can be justified by william brainard ’ s classic 1967 argument, which showed that gradualism is warranted when there is uncertainty about how the economy