. at our last monetary policy meeting, we upheld the assessment that inflation will converge to levels that are below, but close to, 2 % over the medium term. wages are picking up at a pace that is more or less in line with expectations from our models. one thing that has not worked out as expected is the transmission to consumer prices. this pass - through is not working in line with projections. we are analysing this very carefully. but we remain confident that it will eventually do so ; we need to be patient and persistent. but what if the economic outlook deteriorates further and more permanently? in our baseline scenario, capacity utilisation will remain high and firms will be in a position to pass higher wages through to higher prices. that would be more difficult if growth remained below potential. downside risks to growth could then lead to downside risks to inflation in the medium term. we are not at that stage yet, but this will be an important discussion point at the next meetings of the ecb ’ s governing council. but if the outlook becomes gloomier, what will happen then? will the ecb ’ s governing council be even more careful in continuing on its cautious path towards monetary policy normalisation or could there be another turn towards more easing? i have never spoken about a normalisation of our monetary policy stance. i have always referred to a normalisation of our instruments. there is a big difference. after the end of our net asset purchases, the primary instrument to steer our monetary policy stance is again our key interest rates. and as far as their path is concerned, we continue to expect them to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. this rotation of instruments from net purchases to the rate path has been implemented in such a way as to preserve our accommodative monetary policy stance. we have thus not tightened our monetary policy. moreover, we have made it clear that, in any event, we stand ready to adjust all of our instruments, as appropriate, to ensure that inflation continues to move towards our inflation aim in a sustained manner. president mario draghi always stresses that the toolbox is full. but with interest rates at or even below zero and the asset purchase programme at its self - imposed limits, what else is really left? if there is

in a global context. the recent rise takes place against the background of an increase in financial assets supported by middle - east petrodollars and a growing number of muslims seeking to have their assets managed under religious tenets. an equally important factor that propelled growth in islamic finance is recent advances in financial technologies, namely, structured finance. the islamic finance industry has been able to introduce a scheme of profit sharing instead of prohibited interest payments. this has led the way to the development of a range of financial products, including the islamic bond, or sukuk. islamic finance brings greater diversity the development of islamic finance brings diversity to financial markets and financial transactions. when market players with different sets of values enter a market, they increase the variety of financial transactions, which in turn promotes financial market development and creates business opportunities. at the same time, it has a positive effect on the real economy through more efficient resource allocation. against this backdrop, i have a keen interest in what kind of new financial services islamic finance will provide in the future. to date, islamic finance institutions have provided many products that replicate those of conventional finance while respecting islamic values, where interest, or riba, is prohibited. in other words, islamic financial institutions have successfully provided conventional intermediary functions by utilizing the latest financial technology. i look forward to seeing further developments which will enable islamic finance to carry out new functions that conventional financial instruments can not serve. such innovation will improve the allocation of resources, while operating in accordance with islamic values. there are of course a variety of conventional transactions, but basically, all are a combination of two factors, risk and return. islamic finance is expected to offer further possibilities to finance by adding a new dimension to risk and return, which is islamic values. an example would be the development of microfinance under a framework that places great importance on islamic values such as fairness and equality of social economy and business partnership. islamic finance that offers a broad range of products and services is also important from the perspective of financial market and financial system stability. in principle, in a time of stress, a market with diversified participants and transactions is robust compared to a market of homogeneous participants and limited types of transactions. since the asian currency crisis, asian countries have been striving to create diversity in the source of funds, including bonds, instead of relying heavily on banks. i believe that the growth of islamic finance will also contribute to resolving these problems. challenges ahead islamic finance is making impressive growth and is expected to