two ; that makes it essential to clearly specify the objectives of each activity and to clearly adjudicate on conflicting goals. as is often the case in complex relationships, we could spend the whole day studying each side of this relationship. today i would like to specifically address the question of how the new framework, how the two new banking supervision and macro - prudential supervision tasks, will help the ecb to abide by its price stability mandate, as a kind of side effect. to come straight to the point, i ’ ll be talking about financial dominance, monetary policy transmission and the financial cycle. reducing financial dominance the classic function of a central bank is to provide liquidity to solvent banks. and the ecb has unquestionably fulfilled this role even during the crisis. our lending to banks rose by more than €800 billion from 2008 to the height of the crisis in 2012. if the ecb had not provided liquidity, there would have been bailouts, abrupt debt reduction and thus a deepening of the recession – and this would have made our mandate of ensuring price stability much more difficult. however, there is no doubt that this lending entails risks for the central bank. it could fall into the trap of financial dominance : the central bank could finance banks which are not suffering merely from a temporary liquidity crunch, but which are permanently incapable of surviving, which are insolvent. financial dominance is accompanied by the risks of moral hazard and market distortion and – worst of all – by the risk of monetary financing. but how can a central bank become exposed to these risks? no doubt, it is a consequence of the information asymmetry between a non - supervisory central bank on the one hand and the banks and national supervisors on the other. assessing the solvency of a bank often takes more than the equity ratio. having comprehensive knowledge of the capital situation and the risk profile of the bank is a real benefit for such an assessment. this is particularly true in financial crises, in the course of which an assessment of the solvency and riskbearing capacity of a bank depends on many quantitative and qualitative parameters ; we should recall the often difficult valuation of assets that came under pressure in the crisis or those that were not marketable. for the ecb this aspect is more important than for many other central banks. our monetary policy works via the bank transmission channel, so it is bank - based. thus, for our open market operations almost 1, 800 business partners

birth rates in the future would most likely come too late to solve the problems faced by many pension systems in the coming decades. pension systems in europe rely heavily on state - run pay - as - you - go arrangements. funded pension arrangements, be they publicly or privately managed, are generally less developed. pay - as - you - go systems are particularly vulnerable to demographic change : with a declining ratio of the labour force relative to the number of pensioners, the tax base shrinks while the number of recipients increases, leaving policy - makers to adjust the system through reductions in benefits and increases in contributions. it should be noted that debt financing of the gap between pension contributions and pension payments does not represent a viable alternative. given the public knowledge of the pension system dynamics, participants in financial markets would anticipate the unsustainability of delaying pension system reform and require higher risk premia on new debt. in this respect, it is helpful that governments of the euro area have committed themselves to refrain from excessive public deficits through the maastricht treaty and the stability and growth pact. in order to deal with demographic changes, european governments are moving in several directions. so - called parametric reforms strive to put the existing pay - as - you - go systems onto a sound financial footing. they include changes to contributions and benefits, such as adjustments in the indexation of existing pensions and in benefit formulas for new pensioners. two approaches are particularly noteworthy, and the swedish pension reform has been impressive in this respect the first is the introduction of longevity adjustments in the benefit formula, which can insure the system against unforeseen – but welcome – increases in life expectancy after retirement. the second is the introduction of a notional defined contribution system which closely links an individual's contributions to his or her own future benefits. however, parametric reforms have limits : raising contribution rates would increase distortional taxation of labour with a negative impact on labour markets. indeed, labour market reforms are also needed to counter the detrimental effects of the ageing of the population. one should, for instance, consider measures aimed at stimulating the supply of labour. moreover, limiting benefits runs the risk of increasing poverty among the elderly. an alternative and complementary route to securing future pensions consists in systemic reforms, namely a move toward more funded systems. this would partially replace labour taxation with an accumulated capital stock as the source of financing for pensions. several countries, such as denmark and the netherlands, use private savings for future