mario draghi : ecb press conference – introductory statement introductory statement by mr mario draghi, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 12 january 2012. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. let me wish you all a happy new year. we will now report on the outcome of today ’ s meeting of the governing council. based on its regular economic and monetary analyses, the governing council decided today to keep the key ecb interest rates unchanged, following the 25 basis point decreases on 3 november and 8 december 2011. the information that has become available since early december broadly confirms our previous assessment. inflation is likely to stay above 2 % for several months to come, before declining to below 2 %. at the same time, the underlying pace of monetary expansion remains moderate. as expected, ongoing financial market tensions continue to dampen economic activity in the euro area, while, according to some recent survey indicators, there are tentative signs of a stabilisation in activity at low levels. the economic outlook remains subject to high uncertainty and substantial downside risks. in such an environment, cost, wage and price pressures in the euro area should remain modest and inflation rates should develop in line with price stability over the policy - relevant horizon. overall, it is essential for monetary policy to maintain price stability over the medium term, thereby ensuring a firm anchoring of inflation expectations in the euro area in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. such anchoring is a prerequisite for monetary policy to make its contribution towards supporting economic growth and job creation in the euro area. a very thorough analysis of all incoming data and developments over the period ahead is warranted. the provision of liquidity and the allotment modes for refinancing operations will continue to support euro area banks, and thus the financing of the real economy. the extensive recourse to the first three - year refinancing operation indicates that our non - standard policy measures are providing a substantial contribution to improving the funding situation of banks, thereby supporting financing conditions and confidence. in addition, we are actively working towards the implementation of all the measures announced at our december meeting, which should provide additional support to the economy. as stated on previous occasions, all the nonstandard monetary policy measures are

democratic legitimacy. the european parliament could, for instance, assemble in a variety of compositions. going for intergovernmental rather than federal solutions thus generates path dependencies. following the intergovernmental path in monetary policy would have led to the implementation of the uk ’ s proposal back in 1990 of parallel competing currencies rather than a single currency. the perceived lack of input legitimacy in the current institutional set - up also implies a high standard of output legitimacy ; that is, policy - makers need to generate outcomes that are in the voters ’ interest. if they fail to do so, they risk putting the stability of monetary union into question. rules versus discretion – a question of space and time? a monetary union is stable as long as its members find it more beneficial to be in that union rather than outside it. this stability is easier to achieve if everybody plays by the same rules. in a monetary union, economic well - being is not simply a domestic question. member states ’ economies influence each other, which is why a monetary union is more attractive if all its members are prospering. accordingly, europe ’ s decision - makers have given themselves common rules to guide fiscal and economic policies. bis central bankers ’ speeches these rules have repeatedly been broken. this suggests that while decision - makers favour a common set of rules to generate trust and credibility among member states, they have sometimes preferred more flexibility than the rules allow. in essence, we are facing an issue of time - inconsistent preferences : in the long run, governments have an interest in strict rules that foster trust and credibility among member states. in the short run, they might well prefer more discretionary decision - making that allows them to flexibly adapt their policies to circumstances. in addition, election cycles sometimes encourage myopic policy choices that are not necessarily in the union ’ s long - term interest. this is especially relevant in the eu ’ s multilevel governance framework with staggered election cycles at the various national and subnational levels. i respect that governments are bound by their voters ’ will. that will might well differ between jurisdictions in general, and between creditors and debtors in particular. at the same time, i see a risk that governments are making it too easy for themselves when they claim that they cannot make any further concessions at international level because of domestic political pressures. survey data shows that an unquestioning belief in opinion polls is not necessarily in the longterm interest of voters. for instance, support for the euro