in european mortgage markets for the monetary policy transmission mechanism and for financial stability. overall, the eurosystem ’ s assessment is that further integration of mortgage markets is desirable because it is likely to bring about a more uniform transmission of monetary impulses and a more stable financial system as a result of improved risk diversification [ see slide 21 ]. at the same time, the process of financial integration may entail certain risks to monetary and financial stability, such as increased vulnerability of domestic financial systems to external shocks and intense competition that may lead to an erosion of credit standards. so while we strongly support further integration in mortgage markets, we are also of the view that this process should be carefully monitored. that said, full integration of mortgage markets is a process that is likely to take many years and will largely be driven by market forces [ see slide 22 ]. we believe that market participants ’ actions will help achieve significant further progress. for example, they can increase market transparency, improve statistics, promote standardised mortgage products and develop market benchmarks. within the scope of its competencies, the ecb stands ready to support such market initiatives, as we have done in the area of short - term securities. iii. 4. integration of large - value payment and securities transactions : target2, t2s, ccbm2 the final special feature, entitled “ integration of large - value payment and securities transactions : target2, target2 - securities and ccbm2 ”, considers the advances towards an integrated and well - functioning european market infrastructure, focusing on the contribution of the eurosystem [ see slide 23 ]. during the run - up to the introduction of the euro, the eurosystem established the target system and the correspondent central banking model ( ccbm ) which enabled the area - wide settlement of large - value transactions in central bank money and the cross - border delivery of collateral to the eurosystem. while these were undoubtedly already major steps towards the integration of crucial market infrastructures, target and ccbm did not yet allow market participants to manage their cash, collateral and securities positions in an integrated way. the recent establishment of target2 as a centralised technical service addresses this shortcoming for eurodenominated large - value and urgent payments. it also enables the move towards a fully integrated infrastructure in the fields of securities settlement, liquidity and collateral management. the envisaged target2 - securities project and the collateral central bank management ( ccbm2 ) facilities, together with target 2,

leading academics and central bankers from all over the world, many contributions acknowledged the need for an important role for money in monetary policy - making and macroeconomic analysis, although opinions differed on how best this should be achieved. overall, one sensed a widespread understanding and appreciation of the ecb ’ s approach. i do not claim that the ecb has found the solution to embodying the assessment of monetary developments within the framework for monetary policy decisions. but, obviously we have acknowledged this challenge and have done our best to meet it. the two - pillar strategy is the result of the reflection on the different time horizons of economic and monetary developments as sources of risks to price stability. as such, i recognise that the two - pillar framework is a second - best solution, which explicitly acknowledges the lack of a model which encompasses both dimensions. from the outset, i have seen this two - pillar approach as a challenge not only for us at the ecb, but also to academic researchers. research has been confronted with the task of developing an approach which would unite these elements into a single model, a single assessment of risks to price stability or if you wish a single “ pillar ”. in my view, we may still have to wait quite some time before this task is complete – but nobody would be happier than me if we could celebrate success in this odyssey sooner rather than later. monetary policy activism finally let me turn to another question which has become prominent in recent monetary policy debates, namely whether the ecb has been appropriately “ activist ” in the face of temporary shocks to the euro area economy. the success of the ecb ’ s monetary policy in keeping inflation close to the objective of price stability and establishing stable long - term inflation expectations is widely recognised. at the same time, however, the ecb has repeatedly been confronted with the critique that its monetary policy has been too passive, not sufficiently activist or excessively gradualist. this, it is argued, seems particularly true when the ecb policy since early 2001 is compared with that adopted by the us federal reserve. according to this view, the ecb has done “ too little, too late ” in supporting or smoothing economic activity during the recent period of weak economic growth. in this context, observers often refer to the low degree of dynamism of the ecb ’ s policy rate. for example, over the years 2001 to 2003 the fed reduced the target for the federal funds rate from 6. 5 % to 1 %, while the adjustment in