first by decreasing rates of inflation in the course of this year and then by more fundamental upward tendencies later on. against this background, the governing council concluded that vigilance is required and pointed to several factors. first, developments in monetary and credit aggregates will need to be analysed continuously in order to assess upward risks to price stability. second, in view of the improving economic conditions, the potential spillover of large and protracted increases in import and producer prices into consumer prices will need to be assessed carefully. in this context, developments in the exchange rate and in oil prices will play a major role. it will be essential, both for maintaining price stability and for reducing the high level of unemployment, that wage settlements remain moderate and do not themselves contribute to inflation expectations, which would also endanger the sustainability of the current upswing. fiscal policies can make a substantive contribution to maintaining favourable economic conditions by using the current upswing as an excellent opportunity to proceed swiftly towards fulfilling the objectives of the stability and growth pact. economic conditions and perspectives in the euro area appear to be better at present than at any time in the past decade. growth is strong, employment is expected to increase further and the still very high level of unemployment should continue to fall. remaining vigilant to counter upside risks to price stability and pursuing structural reform is the foundation for a sustained period of strong economic growth and a lasting process of job creation. finally, i should like to draw your attention to two items not directly linked to today ’ s meeting of the governing council. first, i should like to inform you that on 30 march 2000 the governing council will meet for the first time outside frankfurt, namely in madrid. the meeting will be followed by a press conference. it is our intention that governing council meetings will be held in other euro area member states twice a year. in the second half of this year it is envisaged that the governing council will meet in paris. second, on 2 and 3 november 2000 the ecb will hold its first central banking conference. the topic of the conference will be “ why price stability? ” and it will take place in frankfurt. the ecb ’ s central banking conference, which will be organised biennially, will bring together invited participants from central banks, international and european institutions, academia and the press. as of today, regularly updated information, including a preliminary programme, will be provided on the ecb ’ s website. the final programme for the conference and all the papers

- completion would be very high. inflation must be brought permanently back to levels consistent with an annual growth in consumer prices of below but close to 2 per cent in the medium term. with the start of purchases we have entered a new, partially uncharted, territory of extremely low interest rates even on medium - and long - term maturities. in seven euro - area countries these are now negative on horizons up to three years. in the second half of april, just before the recent increase, german rates were negative on maturities up to nine years. fears have been voiced that the programme could encourage excessive risk taking in the search for higher yields, that it could generate liquidity tensions in some market segments, and harm some categories of financial operator such as insurance companies and pension funds. these risks must be carefully weighed but not overestimated. there are no signs to date that low interest rates are provoking generalized imbalances. in the euro area as a whole, financial asset and property prices do not appear to be under speculative pressures, investors ’ risk propensity is still low, and credit growth is weak. local and sectoral tensions can be controlled with macroprudential measures, as happens already in some other euro - area countries. asset purchases are being made gradually and continuously so as not to distort price formation ; securities lending by the ecb and some national central banks, including the bank of italy, is helping to keep the secondary market liquid. the potential repercussions for specific sectors are not being ignored. the eu - wide stress test carried out in 2014 revealed that the exposure of insurance companies to the risks of a prolonged period of low interest rates is significant in some euro - area countries ; it is less marked in italy, thanks to a basically balanced financial structure. insurance companies can limit these risks by seeking a better match between the yields and duration of balance - sheet assets and liabilities, improving operating results through diversification of portfolio securities, increasing technical reserves and, where necessary, adjusting their obligations to policyholders to the new market scenario. the authorities should step up their supervisory action and prudential controls as recommended by the european insurance and occupational pensions authority. the risks, both real and financial, would have been far greater had we not begun the asset purchases. the greatest threat to the euro area ’ s financial stability comes from the prospect of a stagnation of production and low inflation, which the programme combats. signs of a recovery of economic