loans to households and companies, while preserving banks ’ overall margins. 2 2 / 10 bis central bankers'speeches for instance, the cost of borrowing for non - financial corporations, at the euro area average, are now more than one percentage point lower than before the first tltros were adopted in june 2014 ( chart 3 ). what is more, the introduction of the tltros was followed by a steep intra - euro area convergence in bank lending rates. that is : countries in which the economic recovery had previously been lagging behind the euro area average benefitted from particularly strong declines in bank lending rates. 3 / 10 bis central bankers'speeches this toolkit has formed the backbone of ecb monetary policy for almost three years, which initiated a pronounced expansion of our balance sheet ( chart 4 ). at the same time, the package had to be adjusted at times in response to the evolving situation. in particular, such adjustments became necessary to counteract the sequence of external shocks that, between summer 2015 and summer 2016, have created headwinds for the euro area economy, thereby slowing down the firming of its recovery. moreover, in march 2016, the governing council also reactivated the tltros to prevent the market turmoil that prevailed at the start of 2016 from undermining the progress that had previously materialised with regard to bank intermediation. as bank lending conditions normalised subsequently at a relatively quick pace, the planned tltros were let to run their course. while credit drawn by banks under this facility will be outstanding for the next three to four years, the facility itself is not an active instrument today. 4 / 10 bis central bankers'speeches as a consequence, while all the instruments – including indeed the credit extended to banks under the previous tltros – interact to determine the stance prevailing today, the main source of easing at present comes from the interaction between the app, the moderately negative shortterm interest rate and the forward guidance on both these policy tools. our forward guidance clarifies the relationship between our two main instruments. it sets the conditionality that governs them and the sequencing of their phasing out. it also provides information about their expected life. with the last dfr reduction in march 2016, the app became the margin along which the governing council can still ease policy to a meaningful degree if needed. keeping policy rates at their present level for the entire life of the app is an enabling condition for the purchases to exert their full impact. this

traditionally communicated our ( re - ) calibrations of the app in terms of two parameters : the pace of monthly purchases and an intentional end date, which is however always conditional on a sustained adjustment. the two parameters have facilitated market participants ’ calculus of the extra stimulus implied by each of our successive rounds of ( re - ) calibrations : by multiplying 9 / 10 bis central bankers'speeches pace by the horizon, markets have been able to identify the size of the portfolio which is relevant for pricing the term premium. what we have seen is that, if confronted with a higher monthly pace in exchange for a shorter intentional horizon or, conversely, a lower pace in exchange for a longer intentional horizon, the reaction in the markets has been varying through time. in more tense market conditions, a higher purchase pace in the near term is generally seen as having a higher easing potential. probably, in conditions in which uncertainty is high, frontloading the accumulation of a given stock of purchases more forcefully signals the central bank ’ s commitment to inject the degree of accommodation necessary to support the recovery. by contrast, in more normal market conditions, the market ’ s capacity to engage in intertemporal arbitrage improves. consequently, investors may become “ more patient ”, or, in other words, better able to evaluate the stimulus that can be expected to come from a purchase plan that is to be executed over a more extended time interval. conclusion while the euro area recovery remains solid, broad - based and resilient, the economy has yet to make sufficient progress towards a sustained adjustment in the path of inflation to levels that are consistent with the governing council ’ s aim. to support such sustained adjustment, the ecb has resorted to a package of complementary policy measures and recalibrated this package at various occasions in line with the evolving macroeconomic conditions, most notably the outlook for price stability, and the state of monetary policy transmission. in the next few weeks, the governing council will again assess how all these factors can be expected to influence the monetary policy stance and will re - calibrate its instruments accordingly, with a view to delivering the monetary policy impulse that is still necessary to secure a sustained adjustment in the path of inflation in a way that is consistent with our monetary policy aim. 1 see ecb economic bulletin, issue 2 / 2017 – box 3 : impact of the ecb ’ s non - standard measures on financing conditions : taking stock of recent evidence. 2 for additional