are sufficiently restrictive to ensure a timely return of inflation to our two per cent medium - term target. keeping interest rates at restrictive levels will over time reduce inflation by dampening demand and will also guard against the risk of a persistent upward shift in inflation expectations. moreover, from the beginning of march 2023 onwards, the app portfolio will decline at a measured and predictable pace, as the eurosystem will not reinvest all of the principal payments from maturing securities. our future policy rate decisions will continue to be data - dependent and determined meeting by meeting. we stand ready to adjust all of our instruments within our mandate to ensure that inflation returns to our medium - term inflation target. we are now ready to take your questions. 4 / 4 bis - central bankers'speeches

l. bini smaghi ( 2011 ) “ the challenges facing monetary policy ”, bologna, 27 january. bis central bankers ’ speeches financial assets. many emes are net savers and export capital to advanced economies. this is the result of various factors, not least the lower degree of globalisation of their policies and institutions. this limited globalisation can be seen particularly in the lack of independent monetary policies and the pegging of exchange rates, which leads to the accumulation of large foreign exchange reserves and to misaligned prices ( chart 7 ). as a result of these imbalances, interest rates in advanced economies may be lowered artificially, to a level which may create problems for their pursuit of price and financial stability ( chart 8 ). again, in most of our macro models the interest rate which affects global financial markets ( the so - called r * ) is anchored on the us economy. this is clearly not the case in reality as the us rate is affected by capital flows from the rest of the world which are evidently not easy to “ sterilise ”. the effectiveness of monetary policy is affected by such influxes. given that the us interest rate is nevertheless the reference for global financial markets, the reflow of funds produces second - and third - round effects on emes and on advanced economies ( chart 9 ). we are witnessing a paradox : emes as a whole are being inundated with short - term capital inflows, and yet they are net capital exporters. we have also failed to understand how these capital flows have increased the liquidity in the financial system and influenced the behaviour of economic agents. for instance, the impact that the pre - crisis low interest rate level had on the propensity of financial institutions to relax credit standards, to increase leverage and to pursue carry trades was underestimated ( charts 10, 11, 12 ). policy - makers not only ignored it but considered that this had nothing to do with risks to price stability, that it was related to financial stability and had to be addressed through prudential regulation. another issue which requires further discussion is the role that the financial industry has played in advanced economies. the conventional wisdom is that financial innovation and financial deepening promotes growth. however, the evidence is controversial and it is not clear to what extent the industry has benefited the long - term growth potential of these economies. to be sure, it has increased their fragility, especially with respect to their public finances. it