and the incidence of second - round effects on domestic wages and prices. second, in the light of the recent financial turmoil, we will analyse the state of transmission of our monetary impulses by the financial system and in particular by banks. if either of these two factors entail downward risks to price stability, we will not hesitate to act. in parallel, other policies should help to put the euro area economy on firmer grounds. it is becoming clearer and clearer that fiscal policies should support the economic recovery through public investment and lower taxation. in addition, the ongoing cyclical recovery should be supported by effective structural policies. in particular, actions to improve the business environment, including the provision of an adequate public infrastructure, are vital to increase productive investment, boost job creations and raise productivity. compliance with the rules of the stability and growth pact remains essential to maintain confidence in the fiscal framework. the agreement on net financial assets let me conclude by turning briefly to the recent decision to publish the agreement of net financial assets, also known as anfa. this is another step to live up to our commitment to be accountable and transparent, both towards you as parliament and towards the public at large. the anfa is an agreement between the ecb and the euro area national central banks – the ncbs. it ensures that monetary policy is unaffected by ncb operations related to their national, non - monetary policy tasks. the right to perform such tasks dates back to the start of economic and monetary union. at that time, the founding member states decided to centralise only central bank functions and tasks that are necessary to conduct a single monetary policy. all other tasks remained with the ncbs. such national, non - monetary policy tasks include managing the ncbs ’ remaining foreign reserves – including gold – after the transfer of foreign reserves to the ecb, managing some non - monetary policy portfolios including those related to pension funds for their employees, or providing payment services to national governments. when the ncbs hold portfolios not related to monetary policy as part of their national tasks, these portfolios are financed either by central bank money provided by the ncbs or by nonmonetary liabilities. this does not interfere with monetary policy as long as it is limited to less than the amount of banknotes needed by the public. this limit ensures that banks still have to borrow from the eurosystem at the monetary policy rate set by the governing council. here is where the anfa comes in. its purpose is to limit

given the continued relative weakness in inflation presuming that the first passage time probability of a stochastic process obeys the wald distribution, the probability of inflation rates hitting a threshold before a time horizon is estimated, assuming a 2 percent threshold and measurement horizon of two years. expectations. nonetheless, i believe that the description of forward guidance introduced by the bank in july - - " [ t ] he bank intends to maintain the current extremely low levels of short - and long - term interest rates for an extended period of time " - - is just the natural conclusion to be drawn from the policy board members'cpi forecasts and the observed inflation rate clearly being far from the 2 percent price stability target. i am not sure whether the description does anything other than merely acknowledge the current situation. rather, the bank should design its forward guidance by clarifying the relationship of that guidance to the inflation rate, inflation expectations, and the output gap, with a view to strengthening its influence on prices. as i have explained, my view is that the current monetary easing measures are not strong enough to achieve the price stability target as soon as possible, and if the bank allows long - term yields to rise when the inflation rate and inflation expectations have not risen sufficiently, the timing of achieving the price stability target may be delayed. as presented in the joint statement by the bank and the government, the bank's mission is to achieve the price stability target at the earliest possible time. instead of strengthening the framework for persistently continuing monetary easing, it is important to strengthen monetary easing itself so that the easing will not be so persistent. given that prices are sluggish and there are concerns over increasing uncertainties, it is important to exert a stronger influence over economic activity and prices. specifically, i believe that the bank should introduce a measure to further lower yields on jgbs with maturities of 10 years and longer, thereby accelerating the pace of widening of the output gap. such a measure would create a more significant change in the behavior of firms and households in terms of setting wages and prices. regarding the bank's commitment to future monetary policy, i am of the view that the bank needs to make clear its stance of not tolerating sluggish inflation expectations. in doing so, the bank at this point needs to encourage inflation expectations to rise by making a commitment to taking additional easing measures if it revises downward its assessment of inflation expectations. thank you for your attention. economic activity, prices,