- benefit pension schemes persist. more importantly, there are growing concerns over the ability of defined - contribution pension schemes to provide adequate income. some of the issues that we are dealing with now were identified by pension experts and policymakers half a decade ago or more, but so far they have been addressed only in part. at the same time, new issues have come to the fore. i am convinced that the evidence that we have gathered so far on ongoing trends, industry practices and policies – corroborated by the findings of the most dependable scientific literature – provide clear guidelines on how to ensure that pension systems will fulfil their mission of giving workers a decent standard of living in retirement. members of dc pension schemes must get sound information on their likely retirement income. the default options of dc plans have to be carefully designed. as the first waves of baby - boomers approach retirement, it is urgent to develop the markets for payout instruments. we have to promote competition among the providers of funded pension schemes and annuities. we have to be aware that market - based arrangements may not be able to cope with extreme financial or longevity risks. the centre of gravity of the global pension fund industry will increasingly shift towards the asian and other emerging - market economies, both in terms of asset allocation and business opportunities. to conclude, one of my favourite quotes on longevity risk is lorenzo the magnificent ’ s rhyme of more than 500 years ago : “ youth is sweet and well / but doth speed away / let who will be gay / to - morrow, none can tell ” [ trans. by lorna de ’ lucchi, 1922 ]. in our world of increasing longevity and population ageing, we face the risk that expectations of limited economic growth ( and the associated liquidity constraints ) may reduce the propensity to save for retirement and make lorenzo ’ s hyperbolic discounting an appealing though illusionary alternative. but in order not to be obliged to pay extremely high costs in the future we – individuals, market participants, policymakers – must shun any such illusion. there is no alternative to fostering economic growth by structural policies, maintaining incentives for retirement saving, facilitating the supply of long - term and indexed financial instruments, properly designing and protecting the pay - out phase, and upgrading the regulatory and supervisory framework. thank you very much for your attention. bis central bankers ’ speeches

##geneous developments across and within countries. but in the event of risks in specific sectors and / or countries, appropriate macroprudential measures can be implemented to limit their accumulation. * 19. * * a protracted, very accommodative monetary policy involves risks which need to be monitored carefully, and low or negative nominal rates for too long may hurt some institutions. but the current low level of interest rates in the euro area is not a bizarre choice of the governing council of the ecb ; rather, it reflects the slack in the economy and dangerously low actual and expected inflation. a less accommodative monetary policy in the current circumstances would be harmful to everyone. the only sustainable way to raise nominal rates is to strengthen growth and job creation. these are necessary conditions for bringing inflation back to target and preserving price stability in the interest of all euro - area citizens. and this is why we need to be ambitious in our decisions. the stronger our actions today, the sooner these conditions will be fulfilled. bis central bankers ’ speeches figure 1 indicator of co - movement between short / long - term inflation expectations for extremely negative variations note : the indicator is based on the probability of co - movement of long - term and shortterm inflation expectations. it is calculated as an odds ratio over a rolling window of 250 working days ; an increase indicates a closer link between large reduction in short - term and long - term expectations. see f. natoli and l. sigalotti, “ an indicator of inflation expectations anchoring ”, banca d ’ italia, temi di discussione ( working papers ), forthcoming. figure 2 core inflation, negotiated wages and unemployment in the euro area source : european central bank and eurostat. note : core inflation excludes energy and unprocessed food. bis central bankers ’ speeches figure 3 over / undervaluation of residential property prices in the euro area source : european central bank, financial stability review, november 2015. note : over / undervaluation estimates are based on four different methods, two statistical and two model - based. a positive figure indicates overvaluation, i. e. prices above longterm average ( in the case of statistical models ) or fundamental values ( in the case of economic models ). figure 4 domestic credit - to - gdp gap in the euro area source : european systemic risk board and banca d ’ italia ’ s calculations. note : the credit - to - gdp gap is calculated as the