, about €1 trillion ( or 30 per cent ) below the peak reached in june 2012. during the same period, the balance sheets of the federal reserve and of the bank of england had expanded by around 60 and 10 per cent, respectively. 7. a forceful and unprecedented monetary policy response therefore became warranted : it was important to preserve the credibility of our actions and underpin expectations. at the beginning of 2015 the governing council decided to extend its programme of asset purchases to public sector securities. under this new expanded asset purchase programme ( app ) the eurosystem is making monthly purchases amounting to €60 billion. as explicitly stated, the programme is scheduled to continue at least until the end of september 2016, and in any event until we will observe a sustained adjustment in the path of inflation consistent with a return to price stability. 8. the choice of this particular measure was driven by the consideration that outright asset purchases allow a more direct control of the size of the increase in our balance sheet, and hence of the monetary stimulus itself. the decision to purchase government securities reflected the need to focus on assets available in quantities sufficient to ensure an adequate degree of monetary accommodation and whose returns are able to influence the conditions of the real economy. 9. the app is a new programme for the euro area, but it is not a revolution in monetary policy making in general. central banks around the world have relied on large - scale asset purchase programmes to further stimulate the economy and fulfil their mandates after hitting the zero lower bound. such measures were taken, as we all know, by the bank of japan, the first time in 2001, and by the federal reserve and the bank of england, following the global financial crisis in 2008. it seems to me that i. fisher, “ the debt - deflation theory of great depressions ”, econometrica, 1, 4, 1933. m. casiraghi and g. ferrero, “ is deflation good or bad? just mind the inflation gap ”, banca d ’ italia, questioni di economia e finanza ( occasional papers ), 268, 2015 ; c. borio, m. erdem, a. filardo and b. hofmann, “ the costs of deflations : a historical perspective ”, bis quarterly review, march 2015. s. neri and a. notarpietro, “ inflation, debt and the zero lower bound ”, banca d ’ italia

again lower the interest rate on the deposit facility will also be assessed. so far the introduction of negative interest rates in the area has been smooth ; other countries seem not to have experienced difficulties in lowering rates further into negative territory. 26. let me conclude with the obvious remark that monetary policy cannot guarantee strong and lasting growth on its own. lacking a common fiscal capacity, demand in the euro area must draw support from a reasonable use of existing flexibility within the limits of european fiscal rules. at the same time the creation of new income, new demand, and new jobs must be supported by measures and reforms designed, as of now, to raise productivity and enhance growth potential. these reforms should take into account the structural challenges that characterise our “ new world ”, including demographic developments, the new wave of technological progress, climate change. a marked expansion in activities that require expertise and new skills is ahead, but at the same time it is possible that the scope for employment in the sectors most susceptible to automation and to the growth of the digital economy will shrink, even considerably. monetary policy cannot be a substitute for the needed reforms, it can only provide favourable conditions to speed the process up and absorb its short - term costs. bis central bankers ’ speeches