stability. inflation has been distinguished generally by lower rates relative to other transition economies. in the last five years, inflation has stabilized at moderate levels as measured both at the end and average period figures, though it sometimes diverges from the target due to unforeseen shocks and speculative factors that are mainly beyond the central bank ’ s control. we will continue to aim inflation rates around the 3 percent level. however, several threats may prevent the bank from reaching the target while preserving growth. to begin with, the signalling power of monetary aggregates targeted by boa may start to deteriorate. this might involve changes in the administrative prices and structural reforms in general, fiscal uncertainty issues, the impact of dollarisation on the effectiveness of monetary policy, the potential decrease in foreign remittances and its implication on exchange rate volatility, financial system development and stability etc. also, what ’ s more important, as the economy gets more and more formal we may start losing some of the flexibility seen so far, making it more and more difficult our task of keeping inflation down with little real costs. in face of this forthcoming developments, we are considering alternative regimes such as it that could both transmit central bank signals better and are more suitable to keep a better balance between economic shocks and inflation. on top of theoretical benefits of an it regime compared to the other regimes, ( summarised in a series of paper by mishkin et al. ( 1997, 2000, 2002 ) ) such as broader information base it utilises, its relatively higher flexibility with regard to supply shocks, the fact that it is easily understood by the public, there is also the successful reference to regime shifts in other european transitioning and developing economies can be made, such as the czech republic, hungary, iceland, poland and turkey. bearing the above issues in mind the boa retains that a switch to inflation targeting over the medium term will put us in a better position to strike the right balance between growth and stability. accordingly, it has initiated steps to improve its governance structure and strengthen its analytical capacities, with technical assistance from the fund. to this end an open forum took place at the end of last year where most of the issue regarding the implementation of inflation target were discussed by top experts all around the world. the main motivation for moving to the it regime is the anchoring of inflation expectations in the medium to longer term while allowing some room to respond to shocks. i ’ m conscious that going to fully fledged inflation

non - performing loans across the euro area, i take a great interest in this topic and look forward to hearing the thoughts of our spanish and italian guests on the dynamics underlying bank profitability in their countries. 1 in the area of financial regulation, the changes experienced on both sides of the atlantic since the crisis have been dramatic. the crisis response in all of our jurisdictions has involved a wide range of regulatory interventions, from enhanced stress - testing capabilities and communication strategies to the development of the macroprudential toolkit. the speed with which these features have been conceived and implemented is of course to be applauded and many of the people in this room have been important contributors to the rolling - out of this new central banking architecture. however, such rapid and large - scale responses often leave us vulnerable to “ blind spots ”, unintended consequences and implementation challenges. discussions such as those that will take place over the next two days are an important part of our attempt to fine - tune and enhance our performance as macroprudential authorities and regulators. 1 / 2 bis central bankers'speeches the importance of the housing market as a driver of the credit cycle as well as the status of mortgages as the chief source of debt and financial vulnerability for most households has meant that in ireland we have paid a particularly strong focus on macroprudential measures. in this context, we are delighted to have a number of focussed sessions on this topic. we underwent an extensive review of the first 18 months ’ experience with loan - to - value and loan - to - income restrictions in november last year. we are committed to reviewing the measures using a wide evidence base on an annual basis. 2 we hope to be able to both learn from you and inform you as we share experiences tomorrow. apart from our own experience here in ireland, the focussed sessions on housing finance and the interaction between government, lenders and the mortgage borrowers in the united states promises to be particularly illuminating. despite the timing on a friday, i encourage you all to stay until tomorrow afternoon to hear the insights of our four guests from the united states on this topic. www. centralbank. ie / news - media / press - releases / non - performing - loans - workout - in - the - euro - area - deputygovernor - central - banking - sharon - donnery - at - bruegel 2 see for example the central bank ’ s macroprudential mortgage measures 2 / 2 bis central bankers'speeches