trade links. it now boasts a solid track record spanning nearly 25 years, making it a credible complement to the dollar as a safe asset. objectively, one challenge remains : some may consider that the euro has become a sort of geopolitical proxy for the dollar since europe decided - for excellent reasons - to take part in the sanctions against russia. for my part, i have noted that investors rightly continue to see the euro and the dollar as two very distinct currencies. if it is to assert itself even more firmly as one of the anchors of the ims, the euro must benefit from support which the commission x has begun to provide, notably through stimulus measures via capital markets. xi in my view, this support must now be relayed by the ecb and all of us, the central banks of the eurosystem. since the introduction of the euro, the eurosystem has adopted a neutral stance regarding the development of the international role of the euro. admittedly, this role is not one of the objectives of the treaty : the euro was created for internal purposes, and not primarily to act as an international currency. but the fears expressed at the time of a potential loss of control over monetary policy are no longer justified ; a strengthening of the international role of the euro would now even be associated with greater autonomy and a reduced impact of exchange rate shocks on inflation. one of the main levers for action is to increase the supply of safe eurodenominated assets. the launch in 2021 of the next generation eu ( ngeu ) programme will raise eur 800 billion. above all, the unified approach to page 5 sur 6 financing eu borrowing, which was introduced by the commission in 2023, means that bonds xii can be issued under the single name of " eu bonds ", which has the advantage of avoiding fragmentation and boosting the liquidity of issues. but i believe we need to go further, by aiming to bring together the bond issues of the commission, the european stability mechanism ( esm ) and maybe the european investment bank : the total pool would then amount to eur 1, 100 billion. we also need to speed up the implementation of the capital markets union ( cmu ), which is crucial for ensuring a better allocation of capital within the euro area : this internal integration priority also serves the euro's external role. these first, realistic steps are the only advances within our reach at this stage. they should not divert our attention from the " creative

reflected in the fall in business confidence indicated in the recent ( september 2011 ) business expectations survey. although pressures on inflation arising from domestic demand are expected to be limited and the impact of foreign price developments are likely to be minimal this year, prices could go up due to an increase in the international cost of food that would exceed current projections. inflation may also rise in the event of any substantial upward adjustment in administered prices and government levies. in this respect, i wish to state the obvious, and that is, while the reasons for increasing utility tariffs are understandable, large adjustments increase inflation which, in turn, erodes living standards and well - being of households. it is for this reason that service providers are encouraged to make every effort to contain costs by enhancing efficiency, in order to minimise the adverse impact on consumers. distinguished ladies and gentlemen : bis central bankers ’ speeches so far as the monetary policy stance for 2012 is concerned, domestic inflation is forecast to remain above the medium - term objective range in the short - term, as the impact of the recent cost increase tapers off gradually. however, it is anticipated that inflation will converge to the medium - term objective range of 3 – 6 percent in the second half of 2012, due to the dampening effect of underlying domestic and international economic prospects. therefore, the prospects for a low, predictable and sustainable inflation in the medium - term will give rise to the conditions that would permit a counter - cyclical accommodative monetary policy, which would cushion the contractionary impact of restrained fiscal policy on economic activity. it should be stressed, however, that, in order to avoid an entrenchment of persistently high inflation, the bank ’ s monetary policy stance will continue to be guided by the extent to which short - term price developments generate medium - term inflation expectations. more generally, and as expected, the bank will respond in a timely manner to any sustained deviation of the medium - term inflation forecast from the medium - term inflation objective range of 3 – 6 percent, without undermining the much needed sustainable economic growth. honourable minister of finance and development planning and your cabinet colleagues, honourable members of parliament, your excellencies members of the diplomatic corps, distinguished ladies and gentlemen, this concludes my submission of the monetary policy statement for 2012. i thank you most sincerely for your attention. bis central bankers ’ speeches