terms for borrowers replace old ones, financial accommodation reaches a growing number of consumers and investors. this incremental process has not yet run its course. it is still on - going. this being said, in the process of price adjustment, the term structure of the money market interest rates has come under intense upward pressure. the expected policy rate path implied by money market quotes has shifted up and steepened noticeably as a consequence. the very short end of the curve – because of expanding surpluses of liquidity – has remained well - anchored around levels that are broadly in line with our forward guidance over those horizons. we are closely monitoring conditions to detect signs of an unwarranted tightening of our stance, to which we would need to react. risks and side - effects of app engaging in a large - scale asset purchase programme is not without risks and side effects. let me focus here on the financial risks of our own balance sheet, on financial stability implications for the euro area, and on effects on income distribution. we monitor very closely the risks for the eurosystem ’ s balance sheet associated with our asset purchase programmes and we manage those risks to keep them at levels that do not threaten our capacity to fulfil our policy mandate to maintain price stability. in particular, we manage credit risk by exclusively purchasing assets of sufficient credit quality, by defining an asset allocation and a limit framework that ensures some degree of diversification, and by applying severe due diligence and monitoring processes. with regard to pspp, we also decided that the purchases of government bonds conducted by the eurosystem ncbs will not be risk - shared within the eurosystem. this does not hamper the effectiveness of the purchase programme and the singleness of our monetary policy. the governing council has full control over all the design features of the programme. the specific risk - sharing agreement takes into account the unique institutional structure of the euro area, in which a common currency and a single monetary policy coexist alongside 19 national fiscal policies. as regards possible financial stability risks, we assess these risks as rather contained for now. looking in particular at housing markets in the euro area, we don ’ t see any signs of general overvaluation. important indicators for increasing financial imbalances are real estate prices and credit growth, but so far we have witnessed low growth rates of both. for instance, the annual growth rate of prices for houses and apartments in the euro area bis central bankers ’ speeches increased on average by

agnes benassy - quere : towards an extended policy mix speech by ms agnes benassy - quere, second deputy governor of the bank of france, at the european university institute, robert schumann centre, economic and monetary union lab seminar, florence, 22 march 2024. * * * it is a great pleasure for me to be here in florence, and i would like to thank marco buti and giancarlo corsetti for giving me the opportunity to share some thoughts about the policy mix – a topic they know very well. since we are here to celebrate the emu lab, i will focus on the european policy mix. i will first review how it has actually worked since the inception of the economic and monetary union ( i ) ; then, i will discuss the complexification but also enrichment of the policy mix over time ( ii ). i would like to convince you that the policy mix is more than what you think. i. the policy mix since maastricht as you all know, the euro area's policy mix was born in maastricht, netherlands, in 1992. hence it was maybe not a coincidence that the maastricht treaty de facto endorsed the instructions of a dutch economist, jan tinbergen. " one objective, one instrument " : the single monetary policy was put in place to ensure price stability at the level of the euro area, while fiscal policies were assigned to output stabilisation at the level of each member state. this framework implicitly assumed the absence of supply shocks. with only demand shocks, there would be no trade - off between price stability and output stability, whether at the euro area or at the member state level. the set - up was clear, simple and straightforward. it was assumed that during economic booms, governments would accumulate buffers that they would subsequently spend to cushion inevitable crises. in this way, they would stabilise their economies while avoiding running excessive deficits. as argued by my co - authors elga bartsch, giancarlo corsetti, xavier debrun and myself in a geneva report in 2020, i the credibility of fiscal policy reinforces that of monetary policy, and vice versa. indeed, fiscal discipline enhances the effectiveness of monetary policy by reinforcing the independence of the european central bank. and reciprocally, a credible central bank delivers price stability at low levels of real interest rates, reducing the risks of snowball effects for sovereign debts on several