##ably high rate of unemployment across the euro area, but particularly in the larger countries in the euro area, is due to structural factors and to inflexibility in markets for labour and in markets for goods and services and that monetary policy is neither the cause of that structural unemployment nor is it the solution to it. the solution to that problem has to be found in measures of a convincingly reformist nature in the labour and in the goods markets and we do hope that taking the monetary policy stance we have taken today will in the ensuing months increasingly focus the attention of policy - makers and the public on the real causes of the unemployment problem, because it will demonstrably become clear that monetary policy is not the answer to solve those problems. question : do you feel completely certain that this interest rate cut represents no danger of inflation to any part of the euro zone, i am thinking, in particular, of smaller, more dynamic economies, such as the irish one. and secondly, is it fair to conclude that the opposition to a rate cut came from the representatives of those countries? duisenberg : i will not allude to any opposition by anyone in the governing council. we do believe that this rate cut, otherwise we would not have done it, will not pose any additional threat of inflationary pressures arising either in small or in large countries. question ( translation ) : president duisenberg, with regard to risks and side - effects. first question : will you keep the interest rate at 2. 5 % even if a recession occurs? have we understood you correctly in this respect? second, is it indeed so that too much capital flowing to the united states at high interest rates flows could become a problem for the external stability of the euro? i mean, the higher interest rates in the united states indicate that, at the moment, still more capital will be flowing to the united states. third question : did you intend to increase the pressure on lenders, i. e. also on the banks, because your impression was that, in the light of the official rate of 3 %, they were not answering borrowers ’ demands for cheaper loans? duisenberg : i am not going to speculate about a potential recession if we do not see one coming. we see a slowdown in economic development., we do not see, or do not yet see, a recession to be on our hands. so i will not speculate about what we would do if there really were a recession

economy and has contributed to the overall monetary stimulus needed to bring inflation rates back in line with our inflation aim. conducting monetary policy in the euro area the supportive impact of our policy measures – including all elements of our asset purchase programme – on financing conditions is therefore evident across firms regardless of their size. it is also evident across sectors and across euro area countries. in other words, we are seeing a smooth transmission of our single monetary policy. a single currency entails a single monetary policy. hence, the governing council takes decisions to achieve the primary objective of maintaining price stability for the euro area as a whole. it also establishes the necessary guidelines for their implementation. at the same time, and in accordance with its statute, 2 the ecb has recourse to the national central banks ( ncbs ) to the extent deemed possible and appropriate for carrying out the operations which form part of the tasks of the eurosystem. ncbs in turn have a duty to act in accordance with the guidelines and instructions of the ecb. 3 this decentralised approach takes into consideration the financial structure of the euro area, i. e. a monetary union made up of segmented national financial markets. in such an environment, the close interaction of ncbs with the banks operating in their jurisdiction brings benefits for the implementation of monetary policy. for example, we are able to collect precise information from a wide range of local counterparties, which can be integrated into the harmonised and rich information set that the governing council needs to design policy. moreover, ncbs, knowing well the specificities of their jurisdictions, are well placed to manage assets to be used as collateral in our operations. this makes our decentralised system more efficient than a centralised approach under the current circumstances. in the absence of a truly single market for capital, securities markets still depend very much on national specificities and preferences. a successful capital markets union would abolish dividing lines between jurisdictions, with positive effects on the way we implement our monetary policy. in the end, we should not forget that a fundamental reason for monetary union was precisely to foster more integrated capital markets and reap the benefits in the form of improved financing conditions across the euro area. 3 / 4 bis central bankers'speeches conclusion since you asked me to elaborate on the issue of decentralisation, let me conclude with a final thought in this respect and in particular on the implications for the functioning of economic and monetary union. the fact that the ecb ’ s non