example, asset prices may increase to levels that are not justified by fundamentals, while periods of low yields and volatility may invite excessive risk taking by financial investors. in turn, such developments can act as an amplifying mechanism for any eventual financial instability. at the same time, financial stability is a precondition for the efficient conduct of monetary policy. to be successful in delivering price stability, monetary policy relies on the effectiveness of the monetary transmission mechanism. in this context, a stable and nonfragmented financial system is important for the smooth transmission of monetary policy signals. we are monitoring closely any potential risks to euro area financial stability, including those from excessive risk taking. currently these risks are contained. and should they emerge, macro - prudential policy would be best suited to address them. recently, indeed some national authorities in the euro area have decided to implement such measures that go in the direction of preventing financial stability risks from emerging at national level. regarding macro - prudential oversight of banks in the euro area, this is shared between national authorities and the ecb. the ecb may top - up specific national macro - prudential measures if it considers these insufficient to mitigate systemic risks. the ecb and the national authorities have at their disposal macro - prudential instruments for the banking sector, as provided in the capital requirements directive and regulation ( crd iv / crr ). these include capital buffers, such as the countercyclical capital buffer, systemic risk buffer and capital surcharges for systemic institutions. additional measures may also be used to improve banks capital and liquidity position, limit their large exposures or increase capital requirements for certain asset classes, such as interbank and real estate exposures. to make the most effective use of these instruments and strengthen the stability of the financial system, the ecb and national authorities regularly exchange information on macroprudential policies. processes for formal notifications to the ecb by national authorities regarding intended measures have already been activated. overall, the ecb will help to identify potential financial stability risks and foster a coordinated stance for macro - prudential policies among euro area member states. conclusion let me conclude by saying that i have always very much valued the exchange with your house both as an exercise of our accountability obligations and as a source of inspiration. i am therefore very much looking forward to our debate and hope that we will now have time to discuss some of the matters for which time was too

is progressing hand - in - hand with a resurgent demand for credit to finance business investment. in the longer - term perspective, this will increase potential output. we intend to carry out our purchases at least until end - september 2016, and in any case until we see a sustained adjustment in the path of inflation which is consistent with our aim of achieving inflation rates below, but close to, 2 % over the medium term. the governing council will take a holistic perspective when assessing the path of inflation. it will evaluate the likelihood for inflation not only to converge to levels that are closer to 2 %, but also to stabilize around those levels with sufficient confidence thereafter. when doing this assessment, the governing council will follow its monetary policy strategy and concentrate on inflation trends, looking through any surprise in measured inflation ( in either direction ) if judged to be transient and with no implications for the medium term outlook for price stability. the positive results of our new purchase programme should not distract other stakeholders from delivering their contribution to put the economy back on track. fiscal policies should support economic growth, while ensuring debt sustainability. a full and consistent implementation of the stability and growth pact is key for confidence in our fiscal framework. moreover, structural reforms should be implemented promptly and with determination. the combination of improved economic structures and sound fiscal policies indeed has the potential to make our monetary policy more effective by encouraging economic actors to take advantage of improved financing conditions and increase investment. price stability and financial stability let me now turn, as suggested by the econ coordinators, to the interaction between price stability and financial stability. price stability is, as you know, the primary objective of the ecb and the eurosystem. and achieving price stability is a necessary condition for financial stability. clearly, unstable inflation developments can distort a wide variety of macroeconomic and financial fluctuations, to the extent that these distortions become harmful for the economy. for example, unstable inflation developments could complicate pricing of assets and blur the signals from relative asset price adjustments with detrimental effects on resource allocation. bis central bankers ’ speeches however, price stability is not a sufficient condition of financial stability. the last crisis proved that financial stability can be at risk even at times when price stability is achieved. and monetary policy decisions also affect expectations and a wide range of asset prices. our monetary policy measures are necessary to achieve our primary objective of maintaining price stability. but we are nevertheless aware that they may have unintended side effects on the financial system. for