the synergies between structural reforms and monetary policy. the spanish economy is a good example of a positive interaction and of the fact that, at least occasionally, reforms and policy are mutually reinforcing. after a period in the euro area with considerable stress combined with very marked segmentation in the credit markets, despite the ecb ’ s increasingly loose monetary policy, this interaction between structural reforms and a strongly expansionary monetary policy finally began to be felt in late 2013 and, naturally, in 2014, in any event in spain. unquestionably, some of the reforms launched in 2012 – 2013 contributed to relieving stress on the financial markets owing, above all, to their contribution to improving confidence. the improvement in public finances governance in the euro area no doubt played a key role in enhancing confidence. naturally, we may well ask what happens under this scenario to those economies that have witnessed a loss in competitiveness compared with those countries that have implemented reforms, for example those affecting the labour market and those which have provided, along with other factors, for the so - called internal devaluation. in this case, the relative loss of competitiveness has been offset by the monetary policy stimulus and its impact on national demand and on the external sector. the depreciation of the euro accompanying this policy which has, no doubt, partly been one of its consequences, has improved the competitiveness of the area as a whole, stimulating exports and overall activity. here we should recall that the euro area as a whole runs a most significant surplus on its transactions with non - euro countries. both excessive deficits and large surpluses entail risks and costs. accordingly, we believe there is justification behind the calls from several international institutions for those euro area countries that have the leeway to do so to implement policies conducive to the expansion of their domestic demand. i shall sum up with two ideas. first, that the de - anchoring of medium - term inflation expectations entails serious risks to financial stability and growth, risks that may be exacerbated in countries that have to follow a process of macroeconomic adjustment and deleveraging. second, that monetary policy and structural reforms, when simultaneously applied, may lead to highly positive synergies. and now a few words to make way for the address by my much - respected and dear friend vitor constancio. as well as having pursued a brilliant academic career, vitor constancio has been at the commanding heights of portuguese

risks for institutional investors, for the allocation of resources and for the sound functioning of the financial system. this was what we experienced in the euro area in the second half of last year. what role can monetary policy play in such a scenario? in september 2014, the ecb decided to expand the tools available to monetary policy by adding a private asset purchase programme followed, in january this year, by public - sector and public debt purchases. ecb policy interest rates were already then at their lower bound, at practically zero, with negative rates on the deposit facility. at the same time, liquidity provision by the ecb through its regular open market operations and its longer - term operations followed an on - demand principle, granting all the liquidity requested by banks ; indeed, for several years a policy has been pursued under which, at the interest - rate marked for monetary policy operations, the ecb has not rationed the volume of liquidity provided to banks. after a few months ’ experience, we can state that asset purchases have clearly contributed to re - anchoring inflation expectations, in line with the medium - term objective and, most importantly, they have checked and reversed the rise in real interest rates. their effects have also been manifest in portfolio re - balancing, encouraging investors to shift holdings from riskbis central bankers ’ speeches free or very low - risk securities to riskier ones, thereby reducing the cost of financing for consumers and investors. the second aspect i would like to mention is the role of economic policies in countries that have had to set about correcting the deep - seated imbalances built up in the expansion that ended with the onset of the crisis in 2007 – 2008. i would refer to policies aimed at improving competitiveness in goods markets and at reducing labour market inefficiencies, which are most significant in countries with high unemployment, in particular in those cases in which high indebtness is a constraint on the possibility of implementing demand - boosting policies. reforms are conducive to wage moderation and to the containment of the inflation rate, with the potential to initially dampen domestic demand owing to lower wages, the increase in the real value of debt and, in some cases, the increase in real interest rates. however, these initial adverse effects could be offset and, as experience shows, exceeded by gains in competitiveness, increases in exports and gains in confidence that positively affect consumption and investment decisions and generate employment and growth. another matter to be highlighted is that of