will nevertheless still be needed in the future depends, amongst other factors, on how well the money market will function and how well liquidity will be redistributed across borders. the current full allocation policy remains in effect until the beginning of 2020. it is therefore certain that the ecb governing council will be tackling the issue of refinancing conditions in the coming year. the question is whether it will be considered necessary to extend the full allocation policy in its entirety. resume 1 purchase programmes, interest rate policy, refinancing : the ecb governing council will soon make decisions on these issues. what measures are still required in each of these areas in terms of monetary policy? in what order and how quickly will changes be made? eurosystem forward guidance will continue to play a key role, ensuring that the various players will be able to adapt to changes in monetary policy in good time. in the medium term, excess liquidity must be scaled back. and policy rates should again serve as the instrument signifying the course of monetary policy. in this respect, we can learn from the experiences of japan and the united states. so, to summarise : we need to ensure proper communication, the phase - out will take time and will have to be done carefully, and we cannot miss the most opportune moment. 3 / 6 bis central bankers'speeches 3 what will happen afterwards? questions on the “ new normal ” if, step by step, we depart from the course of expansionary monetary policy, this raises the question of what “ normal ” monetary policy actually entails. since 2009, the phrase “ new normal ” has worked its way through the financial press. the phrase was coined in 2009 by bill gros and mohamed el - erian, who at the time were managers at pimco. the essence of their message was that, after the lehman collapse in the autumn of 2008, the world of finance would never again be the same as it had been prior to the crisis. even if the phrase “ new normal ” originally had a different meaning, it has since taken on a life of its own as a buzzword. it stands for the notion that we find ourselves in the midst of an upheaval. we anticipate that, after this period of transition has passed, we will enter into a new era of stability. central banks ’ unconventional monetary policy was, above all, an emergency measure. with these measures coming to an end,

carefully and analyse them. in the wake of the financial crisis, regulation has altered financial markets and the money market. particular examples that spring to mind are new provisions governing market risks, limitations on proprietary trading, and supervisory regulations effectively making many transactions more expensive. banks are complying with the new regulatory provisions. this means that banks – in particular large banks – are scaling back their activities in the money market. it remains to be seen whether other market participants – for instance, insurers or large mutual funds – gain a role in intermediation. a look at these five areas – the money market, new players, fragmentation, digital innovation and regulation – shows that they have all altered the financial markets – and the changes have been too many to mention here today. but one thing is clear : the new regime in the financial markets has yet to be put to a serious test over a full economic cycle. we do not yet know what further effects and changes lie ahead, even if we closely monitor the processes and circumstances. the “ new normal ” in the financial markets is, as such, a “ work in progress ”. resume 2 in conclusion, a central bank ’ s monetary policy has a direct impact via the financial markets, their structures and their players. this environment – monetary policy ’ s ecosystem – has changed. and it will go on changing. some of the changes were triggered by the financial crisis and the central banks ’ and regulatory authorities ’ crisis policies. other changes have emerged independently and follow major trends, such as digitalisation. to ensure that monetary policy decisions are successfully implemented in the market and in the real economy, it is crucial to understand market structures. we are thus following and analysing these processes carefully. if changes in the financial market are a “ work in progress ”, this ultimately means that the analysis of how monetary policy is transmitted to the financial markets is a “ work in progress ”, too. we are convinced that a central bank should be independent and committed solely to its objective of 5 / 6 bis central bankers'speeches ensuring price stability. it should not attempt to reshape financial markets and banking beyond this remit. during the crisis, central banks stepped into the breach with their emergency measures – like it or not. now, with the impending exit, we must engage in lively debate on controversial topics concerning fundamental issues of monetary policy. which strategy is the most fitting? which transmission measures are effective? discussions have been underway in the united states for some time