october 2008 and april 2009. the governing council will continue to do what is necessary to preserve price stability and ensure the firm anchoring of inflation expectations over medium to longer - term horizons. such anchoring is indispensable to supporting sustainable growth and employment and also contributes to financial stability. let me also stress that, from the onset of the financial market tensions, the ecb has taken forceful action in its liquidity management, also through non - conventional measures, to make sure that banks are able to refinance themselves. our policy - making has been in a “ nonstandard mode ” for a considerable period of time. in october last year, we adopted a fixed rate tender procedure with full allotment for all main refinancing operations and longer - term refinancing operations with maturities of up to six months. in addition, the ecb expanded its list of assets eligible for use as collateral in eurosystem credit operations. as a result, the size of the eurosystem balance sheet has increased substantially during the financial turmoil, by around €600 billion between june 2007 and march 2009, mainly reflecting the expansion of liquidity provision to the banking system since last autumn. this is of particular significance for the euro area because the banking system plays a more important role in the financing of the private sector than in other major economies. at the same time, owing to the ecb ’ s liquidity management, overnight money market rates have fallen even more steeply than the key ecb interest rates since last october. money market rates in the euro area are now very low, also in an international comparison. overall, the provision and management of liquidity by the ecb have played a crucial role in the implementation of the ecb ’ s monetary policy. they have ensured that banks have adequate access to central bank funding so as to continue financing the economy and that liquidity constraints and perceived risks have not triggered a systemic crisis. the ecb will continue to foster the orderly functioning of money markets and the intermediation of funds by the banking system by taking appropriate measures, be they standard or non - standard. at the same time, the medium - term orientation of our monetary policy provides a clear and unambiguous signpost that will allow us to pursue a credible exit strategy from the current conditions of very low interest rates and extraordinary short - term liquidity support as the economic situation normalises. fiscal policies the economic downturn, discretionary fiscal measures to

fully into account. [ 13 ] but allowing inflation to persist for too long away from the target runs the risk of unhinging inflation expectations. two, be more tolerant of inflation outcomes close to zero. masaaki shirakawa draws on japan ’ s experience to suggest that the risks to economic activity associated with very low inflation did not warrant ultra loose monetary policy stances that undermine financial stability. however, a more flexible approach to implementing inflation targeting can potentially be misinterpreted as reducing the commitment to price stability. it therefore needs to be accompanied by clear communication on the consistency between taking financial stability into account while pursuing price stability as the primary objective. fiscal policy fourth and final proposition : fiscal policy plays an important role in helping to secure both price stability and financial stability. the best contribution that fiscal policy can make to both price stability and financial stability is to ensure the sustainability of public debt. the role of fiscal policy in an integrated policy framework has not received as much attention as it probably deserves. let me offer two reasons why it should. sound public finances reduce the risk of fiscal dominance, enabling monetary policy to operate more freely to pursue its price stability mandate. quantitative easing by major central banks through the purchase of massive amounts of government debt was a necessary response to the strong deflationary pressures unleashed by the global financial crisis. but as government spending continued to grow long after the crisis and central banks continued to purchase government debt, the risk of fiscal dominance grew : the concern that normalising, let alone tightening, monetary policy would create fiscal problems. just as central banks need to gradually unwind monetary accommodation when the crisis has passed, so must fiscal policy return to a more sustainable trajectory. targeted fiscal policy measures can support monetary policy and macroprudential policy in achieving their objectives. tax or expenditure measures have the advantage of being able to either alleviate or accentuate the effects of monetary and macroprudential policies on specific groups of people or sectors of the economy. to help cool an overheated property market, fiscal measures such as transaction taxes on property purchases can be a useful complement to macroprudential measures to curb excessive demand. in the current conjuncture of high inflation, fiscal policy has the versatility of being tighter overall to help ease demand pressures while providing targeted support for the most vulnerable groups. integrated policies as applied in singapore before i conclude, let me say a few words about the singapore experience. singapore does not have a formal integrated policy framework but there has been