in stark contrast to 2009 where inflation expectations hardly moved, even at the short end. the public sector purchase programme it was in this context that we launched the third part of our response, the ultima ratio decision to purchase assets, including public ones, as a tool of monetary policy. it was absolutely crucial that we lifted and re - anchored inflation expectations and warded off these potential second round effects. this is not only because stable inflation expectations are vital for medium - term price stability. it is also because, with interest rates at the effective lower bound, any fall in inflation expectations implies a rise in real interest rates, counteracting the credit easing we were trying to engineer. in fact, by january 2015 expected real rates had started rising – increasing by almost half a percentage point in the previous few months alone. the cost of deflation protection had also gone up by 185 basis points between 2 december 2014 and 9 january 2015, showing that investors saw a material risk that inflation could fall further. we therefore had to react preemptively and decisively, and at the lower bound this leaves a single option – large - scale become the only tool to reinforce the monetary policy impulse in a way that has an immediate and meaningful impact on expectations. while our switch to asset purchases had already begun in september with the launch of our private asset purchase programme, it was clear by january interventions in those markets alone would not be sufficient to achieve the required impact. to firmly lift and re - anchor expectations we needed to alter both the composition of our programme – to broaden the channels through which it would raise future inflation and hence affect expectations today – and the size – so that the monetary policy impulse through each of those channels would be stronger. the only markets in which we could achieve this dual effect were public sector assets. i currently see our public sector purchase programme working through three main transmission channels. first, it is creating strong direct price effects in markets that are key for loan dynamics. most importantly, for loans that are priced against the sovereign yield curve nominal rates are now extremely low across nearly all euro area countries, with real rates lower still. our purchases of non - sovereign public assets are also reinforcing a revival in credit, albeit through different channels. for example, our purchases are effectively lowering the funding costs of bis central bankers ’ speeches supranational lending institutions, such as the european investment bank, and of national development agencies, such as kfw in germany. and we continue

jean - claude trichet : the changing world of global governance keynote speech by mr jean - claude trichet, president of the european central bank, at the institute of international finance, spring membership meeting, vienna, 10 june 2010. * * * ladies and gentlemen, i remember vividly when the institute of international finance ( iif ) was founded back in 1983 at the time of the international debt crisis. one of its key early tasks was to inform members about fundamentals and policies in borrowing countries. since then, the range of the institute ’ s activities has broadened a great deal. i have continuously interacted with the iif since its beginning ; in the 1980s as chairman of the paris club, later as governor of the banque de france and over the last years as president of the european central bank. and as co - chairman of the group of trustees of the “ principles ”, i enjoy the regular events together with distinguished colleagues from the public and private sectors. i want to thank charles dallara, in particular, for his dynamism and constant efforts in fostering dialogue between the private sector and the official sector. the iif gatherings always provide a fantastic opportunity for stimulating exchanges of views on the international financial system. when preparing my remarks for tonight, i looked at my text from the 25th anniversary iif membership meeting in october 2007. at the time, i concluded that “ it is the task of all the stakeholders of the global financial system [ … ] to live up to their respective responsibilities and contribute appropriately to the stability of this system. ” i trust that all will agree that this statement remains valid today. * * * in recent weeks, we have had difficult news not only on the financial system but also the ecosystem – the news that the oil spill in the gulf of mexico is spreading ever wider – from the riggers who lost their lives in the explosion to their employers, local communities, environmental agencies and public policy - makers. similarly, the financial events of the last three years, which began in a seemingly small part of the us housing market, have touched all of our lives and come to test the resilience of our whole system of global economic governance. the financial crisis has tested the business models and risk management systems of market participants, and the rules and structures of the markets in which they operate. it has tested the preparedness of central banks and governments to take unprecedented support measures to preserve confidence in markets and the economy. and it has tested the ability of