step up, this budget could become a stabilisation instrument, centralising a well - defined set of policy instruments, such as a european layer of unemployment insurance. the third and final stage of fiscal integration would only be achieved if agreement can be found both on financing ( direct revenue - raising capacity and common debt issuance ) and on the desirable level of business cycle synchronization. as access to this third stage would be linked to reduced risks, this perspective would be a powerful incentive for national discipline and commitment as shown during the march to the euro. c. how to set up a legitimate institution with a genuine administrative capacity? further integration and democratic accountability should progress together, as discussed in my recent article with jens weidmann. we need to enable the european economic administration to be more efficient, while establishing strong enough political legitimacy to ensure balance between liability and control. a european treasury headed by a euro area finance minister would have a chance of embodying such a delicate undertaking. these institutional changes obviously require a new treaty, notwithstanding the “ low hanging fruits ” we can and must pick up in the coming year. first, we need a legitimacy - enhancing appointment process. the finance minister could thus be appointed for a five - year period by the european council acting by qualified majority on a proposal from the president of the eu commission. the new appointment would be subject to the formal approval of the european parliament, and the finance minister would be member of the commission, as well as chair of the eurogroup. the minister would angela merkel ’ s first parliamentary speech of the third term, 18th december 2013. bis central bankers ’ speeches thereby have the legitimacy to represent internationally the euro area in economic and financial fora, alongside the president of the ecb. second, the euro area finance minister would need to be backed by a genuine treasury administration, which could include staff from the commission ’ s economic and financial directorate general, the esm, and the economic and financial committee secretariat. such a civil service would also benefit from the public advice of two independent bodies, the european fiscal board and the competitiveness council. last, if we succeed in implementing further integration, we will need stronger democratic control over euro area affairs. to this end, we will need to consider institutionalising a euro area format of the european parliament. relationships between euro area mps and national parliaments will also need to be enhanced, through an inter - institutional agreement, or by creating dedicated commissions. * * * to conclude,

years ahead. the latest ecb staff projections foresee average inflation at 0. 0 % in 2015, rising to 1. 5 % in 2016 and 1. 8 % in 2017. a key factor for a full recovery of the euro area economy and ensuring that inflation does not remain too low for too long will be the extra stimulus that the governing council decided to introduce in january under the ecb ’ s expanded asset purchase program. this decision was premised on two considerations. first, the momentum supporting the economic recovery was viewed as too weak and fragile to give us sufficient confidence that inflation would return to levels closer to 2 % over a policy relevant medium - term horizon. second, the expansive potential of the monetary policy measures that had been decided between june and october was seen as uncertain. this was because they were largely bis central bankers ’ speeches dependent on banks ’ own decision to borrow eurosystem funds and lend them on to their customers. the cumulative uptake under the first two targeted long - term refinancing operations stood at around €212. 4 billion. therefore, the monetary impulse had to be reinforced and needed to be quantitatively more predictable and controllable to put the economy and the outlook for price stability on a firmer footing. on 9 march, we started purchasing public - sector securities as part of our expanded asset purchase programme, which also comprises interventions in the abs and covered bond markets. overall, our asset purchases will amount to €60 billion per month. the pace of purchases so far puts the overall program on track to reach a total of €60 billion in march. at this point in time we see no signs that there will not be enough bonds for us to purchase. feedback from market participants so far suggests that implementation has been very smooth and that market liquidity remains ample. our interventions have accelerated a trend that had been evident since some time. a steady process of re - integration across financial markets and jurisdictions had been under way since the summer of 2012. what is new today, however, is that lower interest rates in capital markets are increasingly being transmitted through the entire financial intermediation chain. lower funding costs for banks have started to influence the cost of borrowing for households and companies. as bank lending rates are being reduced, new investment projects – previously considered unprofitable – become attractive. in the short - run, this should sustain the demand for credit and investment. indeed, the banks covered in our bank lending survey confirm that the easing of lending conditions