adjust our forward guidance. this forward guidance was put in place to stabilise market expectations and to enhance the effectiveness of our asset purchases. this is because we indicate that interest rates will rise only when we are “ well past ” the horizon for asset purchases. so prolonging asset purchases pushes out market expectations of the first rate rise, depressing interest rate expectations across the curve. of course, the effectiveness of that guidance also relies on market beliefs of our future actions. in effect, forward guidance is a promise not to react to data outturns in the future so as to persuade markets to maintain low expectations for interest rates. but if we offer guidance that extends too far into the distance, beyond the point where we can form reasonable expectations about the economy, it risks unduly tying our hands unless this is backed by unanimity in the governing council. 3 / 5 bis central bankers'speeches this is a particular risk at present when, as i described earlier, any future increase in interest rates needs to be gradual, and hence moving late could result in policy remaining too loose for too long. certainly as the time comes to reconsider our monetary policy stance during the course of 2018, we should reflect at length on the degree to which we wish to pre - commit ourselves. risks to monetary policy extend beyond the immediate outlook for inflation. our policies have reduced the spread over risk - free interest rates paid by households and firms for their borrowing, and unblocked the flow of credit to the real economy. such spreads are at their lowest ever level. yet reduced spreads may encourage investment in businesses that are only profitable at low interest rates, and such loans risk turning sour as interest rates rise. indeed, banks and investors may be tempted to “ search for yield ”, without being adequately recompensed for the risk they are taking on. the normal place for monetary policy is not at the long end of the yield curve, but at the short end. the focus of monetary policy is of course on our price stability mandate, and ensuring financial stability risks are adequately mitigated is the role of microprudential supervision and macroprudential policy. while there is little evidence at present of area - wide credit - fuelled bubbles, there are some notable localised pockets, such as in commercial real estate, and evidence of “ search for yield ” behaviour. the financial crisis showed how such risks can interfere with the smooth operation of monetary policy through their effects on banks, which

. when assessing appointees to the board or other key management functions of european banks, we consider their knowledge, skills and experience, as well as their reputation and the time they are able to dedicate to the role. we also take into account any possible conflicts of interest arising from the bank ’ s various activities and clients which could potentially hinder the independence of mind of those occupying key positions. most importantly, suitability must be met at all times. the emergence of new facts that may affect the banks ’ or the ecb ’ s initial assessment of a board member ’ s suitability could lead to a reassessment of the suitability of that member, by either the bank or the ecb. in cases where a board member is deemed no longer suitable, he or she may be removed from their management function, as provided for under eu law. beyond individual suitability, we also have expectations for the board as an ensemble – i. e. whether collectively its members have the right combination of characteristics to adequately manage the bank. between them, board members must have a good range of skills and experience, including, but not limited to, being well - versed in risk management. they must have a clear picture and a good understanding of the risks banks face and be ready and able to mitigate those risks. in addition, banks ’ boards must be diverse – not just in terms of gender, but also in terms of broader diversity, as set out in eu law. [ 4 ] we have engaged with those banks which do not yet have diversity policies or internal targets for gender diversity at board level. as at the end of 2021, a third of the banks under our direct supervision did not meet their internal targets for gender representation at board level. of course, the economic environment and the skills required to navigate the banking business keep evolving. nowadays, a bank ’ s board should be well - versed in climate and environmental risks, as well as it infrastructure and digitalisation strategies. we therefore encourage banks to nominate board members with adequate expertise in these areas. digital banks are increasingly complex structures and cybersecurity has never been more important. however, at the end of 2021, only around a fifth of the euro area ’ s largest banks had sufficient it expertise at board level. increasing this ratio will be key for banks to navigate the digital era successfully. behaviour and culture the elements i have mentioned thus far make up the design and structure of a bank ’ s internal organisation. they