discussion we should have with the oireachtas. there ’ s the avenue of private meetings with the inquiry or officers of the inquiry? there ’ s the question of providing paper records, the account of the ecb? whatever can be useful provided that it ’ s consistent with our legal framework notably in terms of confidentiality. the inquiry is likely to look at what happened in the lead in to the bailout, which remains controversial. did jean - claude trichet go too far in the letter? first as you know the letters have been disclosed on our website with all kind of accompanying documents which i hope help inform the discussion, also in ireland. we ’ ve done it also to inform the discussion in ireland. in substance what the ecb president did at the time was to clarify the framework under which the ecb operates. the ecb is a rules - based institution. we have to make it clear what are the constraints under which we are operating. some of them are legal, some of them are practices or long - standing practices and ecb decisions, which altogether constitute our organisational framework. at the heart of this organisational framework, we have the principle under which the ecb lends – under monetary policy – and the national central banks lend – under emergency liquidity assistance when that happens. both the ecb and the ncb can lend only to solvent institutions because lending to an insolvent institution would be doing the government ’ s job to resolve it and circumventing the prohibition on monetary financing, which is a treaty requirement. and, when they lend, both have to lend against good collateral. what the president of the ecb did was to restate these constraints and to explain a number of conditions that would need to be met to fit into these strict criteria. so that was about reaffirming the rules. to be clear : the ecb did not take a decision. the ecb did not invent a new rule. that was just about enforcing existing rules in that particular very new case. in an unforeseen, untested situation, there was a need to clarify how the rules would apply. you had an ecb president saying emergency support for ireland ’ s banks could be withdrawn if there ’ s no bailout. and yet once there was a bailout – and this remains very controversial in ireland – a demand to impose losses on senior bondholders was refused on three occasions. bis central bankers ’ speeches that ’ s a

to focus on carrying out from the second half of this year. as inflationary pressures on the demand side are still not high, while the domestic economy is expected to continue its solid growth, we will need to maintain our accommodative monetary policy stance. in this process we will however have to consider the facts that the financial imbalances can grow, and, from a longer term perspective, that we need to increase our monetary policy operating capacity to respond to fluctuations in business cycles. from this standpoint, we will have to carefully judge whether it is necessary to adjust the accommodative monetary policy stance further, while closely checking future economic growth and inflation trends, changes in the monetary policies of major countries and the consequent financial stability conditions. in the second half of this year we will have to consider the inflation target to be applied from next year. the way in which the inflation target is set, and the method by which it is operated, have 1 / 3 bis central bankers'speeches direct effects on the central bank ’ s credibility and on whether economic actors ’ inflation expectations are securely anchored. we will have to closely analyze whether there have been any structural changes in the underlying price flows, and in the relationship between growth and prices, and properly set the inflation target and the period for re - examining it. we will also have to look whether there are any areas that need improvement in how we fulfill our responsibilities for explaining policy. we will need to strengthen our efforts aimed at enhancing the effectiveness of our policy communication. when uncertainties are high the markets can react sensitively to even small changes in economic conditions, or even to a single word from the policy authorities. it can thus be said that a meticulous communication strategy is demanded, to ensure that consistent communication concerning our policy directions can be achieved. we will also have to devote special attention to financial stability. financial and foreign exchange markets in some emerging markets with weak fundamental conditions have experienced unease recently. given korea ’ s favorable external soundness it is unlikely that the financial unrest in these countries will spread to affect us. but if overseas risks, from the monetary policy normalizations in major countries and strengthening protectionism for example, materialize simultaneously we will be unable to accurately estimate their effects. we will therefore have to watch even more carefully any changes in these risks. we can also not afford to be negligent in our research on and our responses related to new issues in economics. we will need to strengthen our