historically unprecedented in scope and number. as a somewhat anecdotal illustration to this point, i have recently noticed that a document kept by staff at the ecb listing the main actions taken by major central banks in response to the turmoil since september 2008 only, already exceeds thirty pages of concise descriptions of policy initiatives and specific interventions. more generally, in order to understand the actions by central banks and other public authorities in response to the financial turmoil, it is better to position them against the background of the different moments of the turmoil in which they were taken. indeed, it is possible to distinguish three main phases from the turmoil : 1. from its start in august 2007 to the rescue of bear stearns in march 2008 ; 2. from the post - rescue of bear stearns to the bankruptcy of lehman brothers in september 2008 ; and 3. from the bankruptcy of lehman brothers to date. to the risk of oversimplifying, i would say that the first phase of the turmoil was dominated by concerns about market liquidity and their interaction with funding liquidity at individual institutions ; during the second phase, it became increasingly evident that, as a result of protracted market and funding illiquidity, adverse liquidity - solvency spirals with the potential to undermine the viability of specific banking business models were at work ; finally, following the default by lehman brothers, widespread concerns about the solvency of banking and other financial institutions have become predominant. policy responses have evolved during the various phases of the turmoil so as to address the increasing difficulties. 2. 1 first phase of the financial market turmoil : august 2007 - march 2008 during the first phase of the turmoil, the eurosystem responded to the challenges mostly through a combination of operational measures in the field of euro liquidity management and increased communication to the public. this phase also saw the start of significant international cooperation among central banks to mitigate funding shortages in the global money markets. in line with its historical practice and institutional responsibilities, the key objectives pursued by the eurosystem ’ s liquidity management during this first phase were two : 1. to steer the overnight money market rate as close as possible to its central policy rate ( the minimum bid rate in the main refinancing operations ), so as to implement the monetary policy stance chosen by the governing council ; and 2. to ensure the smooth functioning of the money market, also at term maturities, by facilitating access to liquidity to solvent credit institutions. in particular, by

mario draghi : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, before the hearing at the committee on economic and monetary affairs of the european parliament, brussels, 21 june 2016. * * * mr chairman, honourable members of the economic and monetary affairs committee, ladies and gentlemen, i am grateful to be back speaking to your committee for the second hearing of this year. let me first say that the ecb takes note of today ’ s judgement of the federal german constitutional court. this judgement confirms the ruling of the court of justice of the european union which concluded that the omt programme is compatible with eu law and falls within our mandate. in my remarks today, i will review the state of the euro area recovery and the recent monetary policy measures adopted by the ecb. then, at the request of this committee, i will discuss the investment outlook, outlining in particular why more action is needed to boost investment demand in the euro area. economic outlook and the ecb ’ s monetary policy as regards economic developments, the recovery of the euro area economy gained momentum at the start of the year. it is expected to proceed at a moderate but steady pace, supported by solid domestic demand and the effective pass - through of our monetary policy measures to the real economy. consumers are benefiting from still relatively low oil prices and improved employment prospects. likewise, investment is edging up, supported by higher corporate profits and favourable financing conditions. looking forwards, according to the june 2016 eurosystem staff macroeconomic projections for the euro area, annual real gdp is expected to increase by 1. 6 % this year and by 1. 7 % in the next two years. at the same time, inflation dynamics in the euro area remain rather subdued. the rate of headline inflation was slightly negative in may and is expected to hover at low levels over the coming months. while lower oil prices continue to act as a drag on the annual headline inflation, domestic price pressures, notably from wage growth, also remain muted, reflecting persistent economic slack. according to the eurosystem staff projections, inflation should pick up towards the end of 2016. thereafter, inflation is expected to increase further to 1. 3 % in 2017 and to 1. 6 % in 2018, as a strengthening economic recovery mobilises unused resources. since the start of our credit easing measures in june 2014, bank lending rates for firms and households have fallen by about