to strike a balance between two outcomes : it seeks to preserve the incentives for banks to pass through the stimulus generated by the negative interest rate on their reserves, while mitigating the adverse effects that these negative rates might have on banks ’ lending behaviour by affecting their profitability. the euro area needs financial intermediaries to remain engaged and active in 3 / 5 bis central bankers'speeches monetary transmission, and the new two - tier system will make sure that the ability of banks to extend loans to their customers at favourable terms remains unimpaired. the different elements of this comprehensive package will be mutually reinforcing in supporting favourable financing conditions for businesses and households, which will sustain investment and consumption. greater business and household expenditure, in turn, will support inflation dynamics and make sure that they durably converge to our aim. overall, in view of the outlook and uncertainties we are facing, monetary policy needs to remain highly accommodative for a prolonged period of time. the measures we took at our last meeting underscore our determination and readiness to provide the necessary monetary stimulus in pursuit of our price stability objective. we continue to stand ready to adjust all of our instruments if warranted by the inflation outlook. looking back, looking forwards : achievements and future direction of economic and monetary union the conventional and unconventional measures the ecb has taken over the past decade have been successful in addressing the deflationary risks, restoring the functioning of the monetary policy transmission mechanism and providing vital support to the euro area economy. but the ecb does not operate in a vacuum and other economic policies matter too. allow me to recall my first appearance before this committee in 2011. at that time, half of my introductory remarks were about the functioning of economic and monetary union ( emu ) and the need for other european policymakers to act. so i will conclude my final statement to you by highlighting some lessons that have emerged from these eight years, which i hope can help in addressing the challenges ahead. when comparing the crisis response of the euro area with that of other advanced economies, it is evident that the latter were able to achieve a better macroeconomic policy mix at the time, thanks to more decisive actions in both the fiscal and financial domains. the governing council has reiterated that we are determined to ensure that inflation moves towards our aim in a sustained manner, and that we continue to stand ready to adjust all of our instruments. at the same time, a better policy mix, including fiscal policy, structural

christine lagarde : debate about the annual report introductory statement by ms christine lagarde, president of the european central bank, on the occasion of the presentation of the ecb annual report 2018 at the european parliament, brussels, 11 february 2020. * * * mr president of the european parliament, mr executive vice - president of the commission, honourable members of the european parliament, it gives me great pleasure to participate for the first time in a plenary session and to discuss your draft resolution on the ecb ’ s annual report for 2018. independence and accountability are two sides of the same coin for the ecb : one cannot exist without the other. this is why the ecb ’ s relationship with the european parliament is so important. the ecb ’ s annual report is a central element of this relationship, and parliament ’ s resolution and the subsequent feedback we publish are evidence of the good dialogue between our two institutions. having joined the ecb only recently, i read the draft resolution with particular interest. what struck me in particular was our shared assessment of many of the challenges facing the ecb and the euro area. indeed, the universal nature of these challenges underscores the need for our continued dialogue. today, i would like to focus on two of the overarching concerns that stand out from your draft resolution – the role of monetary policy in the current economic environment and structural challenges facing the euro area economy. the ecb ’ s contribution to the euro area economy euro area growth momentum has been slowing down since the start of 2018, largely on account of global uncertainties and weaker international trade. moderating growth has also weakened pressure on prices, and inflation remains some distance below our medium - term aim. against this background, the ecb ’ s governing council has acted in a determined fashion to achieve price stability in line with the ecb ’ s mandate. the ecb ’ s monetary policy since 2014 relies on four elements : a negative policy rate, asset purchases, forward guidance, and targeted lending operations. these measures have helped to preserve favourable lending conditions, support the resilience of the domestic economy and – most importantly in the recent period – shield the euro area economy from global headwinds. our policy stimulus has supported economic growth, resulting in more jobs and higher wages for euro area citizens. euro area unemployment, at 7. 4 %, is at its lowest level since may 2008. wages increased at an average rate of 2. 5 % in the first three quarters of