speaking, when inflation is above the objective, central banks raise short - term real interest rates above the natural rate to bring inflation down. symmetrically, when inflation is below the objective, central banks lower real interest rates below the natural rate. while the equilibrium real rate is a useful concept in order to frame policy discussions, it is unobservable in the real world, and various models used to construct it provide different answers resulting in a range of uncertainty. what is more certain, however, from these models is that the equilibrium real rate has been falling, both here and across other major advanced economies. by some estimates, it might even currently be negative in the euro area. 2 as i have mentioned previously, potential reasons for this decline include demographics and falling productivity growth. 3 policy rates need to shadow this decline in the real equilibrium rate, otherwise monetary policy would be too tight, dampening activity and causing inflation to undershoot our objective. how the ecb has responded to the crisis with these factors in mind, let me briefly summarise how the ecb has responded to the crisis. we have taken action within our mandate to ensure sufficient stimulus is in place to return inflation to our objective over our medium - term horizon, and to repair the transmission of that stimulus across the whole euro area in order to preserve the unity of monetary policy. in a conventional fashion, we gradually lowered our main refinancing rate to stimulate the 2 / 5 bis central bankers'speeches economy, eventually reaching 0 % in march 2016. however, the size of the stimulus required, combined with the lower equilibrium real rate, meant that this interest rate cut was not sufficient to bring inflation back to our objective. it was therefore necessary to introduce a number of unconventional measures. first, we introduced forward guidance. we communicated explicitly to the market our expectation that interest rates would remain at, or below, the current rate until inflation had sustainably returned to our objective. in doing so, we were able to influence market views of our future interest rates, thereby reducing interest rates across the curve. indeed, while economists tend to talk in terms of one natural rate, there is, in truth, a wide constellation of interest rates that are relevant for the consumption and investment decisions of businesses and households. second, we introduced an asset purchase programme. by buying bonds, including covered, sovereign and corporate bonds, we are reducing interest rates across a range of horizons. these lower interest rates encourage borrowing, either indirectly through banks or

in the wealth of individuals, the composition of wealth has shifted towards a greater emphasis on wealth in the form of financial assets. this is manifest in the increase in the relative market value of stock exchanges, which is clearly visible in most euro area countries. the increase in financial wealth relates closely to the shift towards a market - oriented financial system and also to the increased importance of institutional investors. all the developments i have discussed so far underlie recent changes in the structure of the financial system. financial systems in the euro area could be departing from a bank - dominated structure, becoming more market - oriented or even securitised. an indicator for this development is the declining share of deposits in households ’ portfolios. meanwhile, aided by technology, the disintermediation process on the assets side is under way in a number of countries, even though the process has been quite slow. however, the actual effect of the structural change towards more market - based financial transactions could be larger than the share of external financing from the market would suggest. the existence of market - based financing through increasing competition within the banking sector may have affected the terms and conditions of bank lending in the sense that banks are now more clearly no longer the only potential supplier of external funding for all but the smallest firms. in other words, the contestability of external financing may have increased, with potential competition from market - based financing limiting the scope for banks to profit from lending relationships. it could be added that banks have been encouraged to take part in the process of securitisation by undertaking investment banking activities such as underwriting, which uses their capacities for collecting information as well as private information based on existing credit relations. this also tends to boost the share of non - interest income in the total revenues of banks. the changes in the structure of the financial system and the role of banks are also illustrated by the emergence of new types of players in the financial system. most apparent is the rise of institutional investors who are gaining a more important role in allocating savings from the household sector to the corporate sector, both domestically and across borders. on the one hand, they have provided new types of savings products, often supported by tax concessions on pension or life insurance savings, as well as by technological changes which reduce the costs of collecting savings, gathering information and assessing risk. on the other hand, they have created more demand for different types of securities. while they have enhanced structural changes in the financial system, they have also started to compete