structural improvement. the foundations for economic growth in the euro area have improved in step. to safeguard the soundness of a financial system is a rather complicated task. effective financial regulation and financial supervision are key to financial stability. as financial products become ever more complex, financial regulators and supervisors need to keep pace with developments in the capital markets. they have to strike a fine balance. their core task is to make sure that financial institutions are capitalised commensurate to their respective risk profiles, not least in order to contain systemic risk. on the other hand, they do not want to hinder the development and the use of new instruments and will therefore try to permit as much room as possible so as not to hinder growth. in the aftermath of the late nineties ’ financial market boom, new questions arose. the role of market integrity has been highlighted by a series of financial scandals. cases of insider trading, of investment banks recommending clients ’ stocks against their better judgement, and even some spectacular cases of outright accounting fraud have shaken financial markets to the core. trust has been lost on a grand scale. it needs to be rebuilt by improving the framework of the markets. financial markets must be trustworthy ; only then will investors be willing to provide finance. let me cite one last aspect of sound financial systems. it is also a matter of trust. the infrastructure of the markets needs to be stable and able to withstand shocks. 9 / 11 was a shock not least to the world financial system. it put payment systems to the test. with a little help from the central banks - we stood ready to provide liquidity - the international financial system proved resilient. disruptions in the world financial net might easily have a severe negative impact on the world economy. hence the robustness of the market infra - structure is a major factor in steady and sustainable growth. 3. concluding remarks ladies and gentlemen, uncertainty currently weighs on all debates on economic issues. we cannot abolish uncertainty. it is a feature we will have to live with for some more time, as its causes are many. we can and we should, however, work to improve the resilience of the world economy. world economic growth needs to become better balanced. for this to happen, each of the world ’ s major economic zones has some homework to do. let me again point out how happy i am to be able to be here with you this afternoon to discuss some important issues of the world economy. trans -

and this applies in both directions : the people of the euro area should be protected against any spurt in inflation and against deflation. over ten years ago the ecb defined price stability as an annual inflation rate of below, but close to, 2 % in the medium term. for this year, however, we can expect price increases of only 0. 6 %, for 2015 only 1. 1 % and for 2016 only 1. 4 %. this clearly shows why our current very accommodative monetary policy stance is not only economically appropriate, but also a necessary measure to fulfil our treaty obligation. the governing council is unanimous on this point. at the heart of this accommodative strategy is undoubtedly the fact that the ecb has steadily cut the interest rate on the main refinancing operations to its lowest possible point in recent years. however, the still existing functional deficits of the financial markets are hindering an optimal transmission of the monetary policy signals coming from this very low interest rate. small and medium - sized enterprises in particular still aren ’ t feeling enough of the monetary policy accommodation. we call this an impaired transmission mechanism. that ’ s why the governing council unanimously adopted in june a series of measures which will improve the transmission of our monetary policy : first, we decided to continue to conduct our main refinancing operations as fixed - rate tender procedures with full allotment for as long as necessary, and at least until december 2016. banks will therefore receive as much liquidity as they need as long as they can offer adequate collateral. second, we have reduced the interest rate on the deposit facility to below zero for the first time and cut it further last week. by the way, this is not to punish the banks, as i have often read. rather, we are giving them an incentive not to park liquidity at the central bank, but to pass it on in a productive way to the real economy. in an environment in which it is already difficult for businesses to gain access to capital for their own investments, it is important that banks also provide sufficient funds for profitable projects. third, we have decided, within a framework of eight targeted longer - term refinancing operations, to make available long - term liquidity to banks for a period up to 2018 – in proportion to their credit volume relative to the real economy. thus, banks are encouraged to bis central bankers ’ speeches lend to enterprises in the euro area. at the same