of governments. ” within that framework, a range of instruments are possible, and that includes asset purchases, which we ’ ve done already. is qe possible if we see a risk of deflation? first, let me take one step back and say we ’ re not seeing deflation in the euro zone. we see low inflation, slowly increasing from the current low levels back to below but close to 2 percent. that is the base - line scenario from which we are working. the discussion is which kind of risks we have around the scenario. certainly we have upside risks and downside risks and we are alert to the notion that we are close to the region where a downside shift in our inflation path could bring us into dangerous areas, so we have to be prepared. but, again, this is not a discussion on deflation. it is a discussion on how low can inflation be without triggering adverse dynamics. we are not there, but we have to be alert that negative shocks could trigger that kind of scenario and then we have to be ready to react. the second point is what we would do. we have a range of instruments that we can use to cope with different kinds of shocks and we have to distinguish broadly between shocks to the bis central bankers ’ speeches liquidity situation in the euro zone that would start from the front end of the money - market curve, and for that we have a number of instruments. then we have other shocks that would change our medium - term inflation path and then we have other instruments. it can be either or a combination of instruments that we can use. the bottom line here is that it all depends on the nature of the shocks, so it has to be driven by the data and it has to be informed by judgment. in that data that we will analyse, certainly ecb staff forecasts will feature prominently, but it ’ s really too early to comment since we don ’ t have the numbers. but staff forecasts are not the only input, the governing council will base its judgment on all economic data, soft and hard. will there be a certain trigger? there is no trigger, it ’ s all a matter of judgment. we have a very clear mandate and that ’ s medium - term price stability. are you concerned that emerging market turmoil will affect that scenario? that ’ s certainly part of the developments that we have to follow closely. the g20 discussions in two weeks in sydney will be an important milestone because then we ’

ll know more, in particular from our emerging - market colleagues what the situation is in their jurisdictions. it ’ s too early to tell whether what we are seeing in global financial markets today can lead to disruptions that can prompt a change in either our growth scenario or our inflation scenario, or whether this is a shift in global demand that would have to take place anyway and that can be managed in a smooth way by the international community. it ’ s too early to tell. just as an example, we haven ’ t seen the exchange rate of the euro going up significantly since the start of the current emerging market developments. we haven ’ t seen that much of a spillover effect on the euro zone so far, which is grounds for cautious optimism. what channels of impact are you watching? generally, the main channel is the output channel. we have to understand whether the current volatility on global markets will have an impact on global output generally. that ’ s why the g20 discussion is so important, since this has to be informed by the imf in particular. so far the jury is still out. in terms of inflation, it sounds like we are teetering on the brink of the danger zone, as ecb president mario draghi talked about. is that a fair assessment? it is a fair assessment, but what we are seeing from incoming data from the real economy in euro zone countries is that all so far confirms that the euro zone economy, both in core and in non - core countries, is on a recovery path. in our baseline scenario, the forces coming from the real economy, i. e. the ongoing strengthening in aggregate demand are enough to countervail disinflationary forces. we will get the 2016 inflation outlook in march. would a rate cut help if it turned out that inflation is moving too slowly back towards the target of below but close to 2 percent? you first have to ask yourself what are the causes for low inflation and in particular whether downward pressures on prices come from the demand or the supply side. that is a very important discussion from a monetary policy standpoint. certainly aggregate demand is weak, which explains a lot the low level of inflation. but we see positive news coming from this side. we see aggregate demand now developing in the euro zone. but on the supply side, we have an ongoing adjustment of relative prices in several countries, which relates to reforms on the labour and on the product markets, in particular through compressed margins. this