case, it is obvious that any funding support from the eurosystem would have to be carefully re - assessed, as our operational framework serves the implementation of monetary policy, and is not meant to cater for all individual banks ’ liquidity needs, irrespective of what causes them. in the euro area, it is the responsibility of the national central banks at their risk and cost, possibly guaranteed by the government, to act as the lender of last resort. banks should take all appropriate measures to reinforce their balance sheets as well as their capital base, thus creating conditions under which they can fund themselves in the market once market conditions return closer to normal. we do not know today what normality will look like after the crisis. we may have to perform our monetary policy in an environment that is somewhat different from the one prevailing before the turmoil. for instance, one might expect to observe higher liquidity and risk premia on the markets than during the period that preceded the crisis, and possibly also reduced activity in some longer - term unsecured market segments. if such changes imply that for any given policy interest rate, the monetary conditions are somewhat tighter than they would have been in the pre - turmoil period, that will of course have to be taken into account when setting the policy rate. but such “ new facts of life ” do not necessarily require any major change in the operational framework. we shall of course consider thoroughly what lessons are to be learnt from the crisis, but so far, the framework that prevailed prior to the turmoil, featuring a broad universe of counterparties, a long list of eligible collateral and large refinancing operations, seems to provide a good benchmark. it served us well before the crisis, and could be adapted quickly as circumstances worsened. 3. the interplay between fiscal and monetary policy while the current challenges for monetary policy are immense, those for fiscal policy are even greater. fiscal policy in most advanced economies does not just have to exit from the fiscal stimulus and support measures taken in response to the crisis. even with these measures reversed, fiscal policy still faces at least three important challenges. first, even excluding crisis - related stimulus measures, most advanced economies are still left with historically high deficit - to - gdp ratios, which, viewed from today ’ s perspective, are largely structural in nature. to put it another way, given the lower actual and potential post - bis central bankers ’ speeches crisis output and correspondingly lower post - crisis tax revenues, pre - crisis

and moved most closely with the output gap. in addition, all three were relatively effective at looking through sector - specific shocks. two of the measures — cpi - median and cpi - common — fell short on one criterion : they are relatively more difficult to explain and understand than cpix. i hope this speech and the supporting documentation available on the bank ’ s and statistics canada ’ s websites will help in that regard. nonetheless, all the new measures performed better than cpix for three main reasons. first, they are less influenced by sector - specific shocks and therefore more accurate. in episodes such as the sharp rise in auto insurance premiums in the early 2000s that i mentioned earlier, as well as the deflation in auto prices that started in 2007 and the run - up in meat prices in 2014, cpix was unable to filter out these transitory shocks ( chart 3 ). the new measures were relatively more effective at doing so. it is important to note, however, that no measure of core inflation can filter out every type of temporary shock that a central bank may wish to look through when conducting monetary policy. in an open economy like canada, for example, currency movements can have a profound impact on consumer prices. a movement in the exchange rate would have an effect on the level of prices for imports and domestic import - competing goods and the persistence of this effect would depend on the duration of the exchange rate movement, but its impact on the rate of inflation would be much shorter. thus, this exchange rate passthrough ( erpt ) effect would not warrant a policy response as long as inflation expectations remain well anchored. the impact of erpt does not typically reflect changes in the underlying trend of inflation, which is affected by the degree of excess capacity in the labour market and in the economy more broadly. 14 at the same time, most measures of core inflation tend to be affected by erpt in varying degrees because they are sensitive to the relatively broad - based price movements caused by erpt in canada. still, on average, these measures were found to have somewhat lower pass - through from the exchange rate compared with cpix. in particular, cpi - trim and cpi - common attach relatively more see l. savoie - chabot and m. khan, “ exchange rate pass - through to consumer prices : theory and recent evidence, ” bank of canada staff discussion paper no. 2015 - 9 ( october 2015 ). importance than cpix does to the prices of services, which are