decisions are taken with unanimity – you have to defend that decision. there are 25 of us and, for sure, there are sometimes different views, but when a decision is taken by a clear majority, it is important to defend it. it would be much better if we tried to reduce the level of surrounding noise. would it have been difficult for president draghi to push the package through had a majority of the executive board been against it? the basis of the package was the outlook. inflation expectations are not de - anchoring, but there is a potential risk that they could do so, and the threat of deflation could come to the fore. that ’ s why we reacted. the core element of the package was forward guidance. people have not paid much attention to that, but in my view, that was the main, important message. and afterwards we took other measures : cutting the interest rate, “ tiering ”, targeted longer - term refinancing operations, and finally the asset purchase programme ( app ). but forward guidance is the main element and the core reference for how things can evolve in the near future. one central bank governor recently suggested life would be much easier for the ecb if it simply accepted inflation rates at closer to 1 % than 2 %. where do you stand? 1 / 3 bis central bankers'speeches our remit is to achieve price stability, and price stability according to our present definition is below, but close to, 2 %. whether it is symmetric or not is a different question – while it ’ s not a minor question, it ’ s not the most important one either. the third element we are perhaps overlooking is the reaction function : how powerful our instruments are in their ability to push up inflation. i think that ’ s the real point. we have not entered into discussion over whether the target should be modified. it will be discussed by the governing council and perhaps with a new president it will be different. but for me the kind of monetary policy decisions you take and the tools you have to achieve the target are much more important. it ’ s been argued that tiering is in effect a rate increase ….. no, i don ’ t think so. tiering is a form of mitigation. that ’ s why it was set. is it a form of mitigation that lays the ground for further rate cuts? we haven ’ t discussed it, but my impression is that – 0. 50 % is

nbh ) - even if the general public, or politicians, may be excused for not fully understanding the intricate interconnection between accounting procedures in a country with high inflation and the processes of the real economy. this is a good example of the generalised mess created by inflation. challenges for the hungarian banks as i said right at the outset, it is now time to look ahead and begin to address some major issues for the hungarian banks - issues which, thanks to the progress made over the past few years, are no longer totally dissimilar from those facing banks in western europe. i intend to make a few comments on these, since they are issues on which i can possibly throw some light on the basis of my own professional experience. 1. the first is about the specificity of banking, i. e. about the possibility or desirability of clearly distinguishing banks, through rules and regulations, from other financial intermediaries. i noted that the recent changes in hungarian banking law have implied a movement towards the de - specialisation of banks, notably in the field of securities transactions. i believe that a development towards the universal banking model is justified - on certain conditions. it is justified for two groups of reasons. first, because financial innovation in general, and securitisation in particular, are breaking down the traditionally neat distinction between banks and other financial intermediaries, indeed even between financial intermediation and financial markets, all over the world. some time ago, banks were defined as financial intermediaries whose liabilities ( mainly sight and short - term deposits ) were equivalent to the money supply, and the money supply was defined as the total sum of bank liabilities. this nice circular definition kept academics, bank regulators and central bankers equally happy until the moment when financial innovation started blurring the distinction between money and other financial assets, and securitisation began blurring the distinction between financial intermediation and financial market operations. the proliferation of derivatives, financial futures and the like added to the confusion between balance sheet and off - balance sheet items. the result is that it is becoming increasingly difficult to identify banking on the basis of the old equivalence of “ banking liabilities = money supply ”. this has now been recognised in the sweeping deregulation of banking activities affecting the whole of western europe and, though more cautiously, also the united states. in some cases this has gone so far as to allow the emergence of consolidated banking and insurance activities. second, in