entered into negative territory in two steps ( – 20 basis points ). however, by january this year it was clear that economic recovery as well as monetary and credit indicators were too weak to bring medium term inflation close to but below 2 %. marketbased measures of inflation expectations, even if prone to liquidity shocks, had been falling further below the target and at longer term horizons. the governing council was determined to act boldly to counteract the risk of a too low for too long inflation. in this context, an expanded asset purchase programme was then launched. on march 9th, the eurosystem began purchasing public sector securities in the secondary market along the curve from 2 to 30 years, being mindful of being market neutral. purchases of securities at negative yield are permissible, as long as the yield is above the deposit facility rate. marketable securities purchased under this program will be made available for securities lending. this programme is intended to stimulate the economy through different channels. the first one is the portfolio rebalancing channel, in which the fall in yields on safe government bonds induces investors to buy riskier assets, thereby stimulating the economy. since the launch of the programme yields have dropped not only for the assets purchased but also for bank and corporate bonds and equity prices have continued to rise. a second channel works through lowering and flattening the yield curve. the purchase programme will continue until the end of september 2016 and beyond if we do not see a sustained adjustment in the path of inflation. this reinforces the guidance that interest rates will remain low for an extended period of time. a third channel is related to increasing credit supply. if the euro - system buys assets from non - banks or institutions, then these funds will reappear as deposits in the banking system. andrade and le bihan, 2013, inattentive professional forecasters, journal of monetary economics, volume 60, p. 967 – 982. bis central bankers ’ speeches this creates an additional source of funding for banks which in turn increases the supply of credit to the private sector. a last channel is the signaling effect. by acting decisively and more aggressively than anticipated, we hope to lift inflation expectations. conclusion let me conclude with my assessment of the impact of the qe. so far, recent indicators suggest that our quantitative easing has had a positive effect on inflation expectations. this is true when looking at market - based measures at short term horizons, although less so at long term horizons.

mario draghi : opening of the cultural days of the european central bank – italy 2011 address by mr mario draghi, governor of the bank of italy and chairman of the financial stability board, at the opening of the cultural days of the european central bank – italy 2011, european central bank, frankfurt am main, 19 october 2011. * * * madam mayor, mr. president, ministers, my esteemed central bank colleagues, ladies and gentlemen, for me it is a privilege and an honour to inaugurate this event, together with lord mayor petra roth and president jean - claude trichet, in the magnificent setting of the alte oper, which traditionally hosts the culmination of the european central bank ’ s cultural days. the cultural days, dedicated this year to italy, are opening just days before the end of my term as governor of the bank of italy and the beginning of my new position at the head of the ecb. this means that i will have the pleasure of being here in frankfurt more often. this year ’ s edition of the cultural days is also distinguished by the fact that it coincides with the 150th anniversary of italian national unity. at home, countless initiatives have retraced and commemorated the events that marked our history as a nation. exalting italy ’ s social and cultural roots is essential, because a country ignorant of its past is a country without a future. i am thoroughly convinced that our common european identity must be founded first of all upon common knowledge of the history and the traditions of the countries that make up the union. the cultural days serve this purpose, stimulating reflections on our shared roots. they offer an opportunity to become familiar with the cultural heritage of the nations of europe, to appreciate their fruitful differences, to comprehend their similarities, to grasp the full sense of our common europe. culture is fundamental to making the european union a living reality. the diverse forms in which it is expressed, crossing borders, create channels for mutual understanding and forge a common feeling of belonging, over and above origin or language. we are now at the ninth edition of the days, and certainly one of the reasons for the growing success of the initiative is the enthusiastic participation of the frankfurt public, the primary audience. let me thank you straight off for your attention to this dialogue. this year, there is perhaps an additional reason to spark the city ’ s interest : frankfurt is the city of goethe, the “ universal ” man of the enlightenment whose italienische