as much as possible. on the first part, we were clear in riga ; on the second part, let me stress that we cannot fully compensate for the uncertainty created by other policy - makers ; nor can we fully offset their effects. we have shown in the past few years that monetary policy is flexible, and we have been willing to use every instrument within our mandate to respond to too low inflation. we have gone well beyond what people thought possible and we will do whatever is necessary to deliver on our price stability mandate - no more and no less. thank you for your attention

##b, as well as other central banks, international institutions and some market participants, had identified a number of risks and vulnerabilities in the financial system well before the financial market tensions erupted in august last year. in the four years to the summer of 2007, the exceptionally benign macroeconomic, financial and monetary conditions and the process of financial globalisation, including a “ savings glut ”, had contributed to reducing risk aversion and market volatility, had fostered a “ search for yield ” and rising leverage, and had resulted in the emergence of imbalances and the possible underpricing of risk. thanks to financial innovation, we witnessed an unprecedented growth in the securitisation of bank loans, in credit risk transfer instruments and in other complex structured finance products. consequently, monitoring the distribution and identifying the concentration of credit risk in the financial system became increasingly difficult. these and other concerns had been expressed in various documents, speeches and statements back in 2006 and even before, for example, in the ecb ’ s financial stability reviews of june and december 2006. in early 2007 the warnings became stronger and more specific. for example, the ecb ’ s financial stability review of june 2007 had warned ( i ) that the crisis in the us sub - prime mortgage market could deepen and spread to other markets ; ( ii ) that financial market liquidity could vanish abruptly if investor uncertainty and risk aversion were to rise, revealing several vulnerabilities in the financial system ; ( iii ) that investors may be relying excessively on credit rating agencies ’ risk assessment of structured products ; and ( iv ) that it had become increasingly uncertain whether those who ultimately held the credit risk could manage it effectively. but this, of course, is not the whole story. there were a number of other factors and mechanisms that played a role in the propagation and amplification of the market turmoil which neither we, nor other institutions, foresaw, at least not fully, notably : ( i ) the way various intertwined vulnerabilities would eventually combine ; ( ii ) the speed and intensity with which tensions in one specific segment of the credit market in one country could spread so extensively to other markets and countries ; ( iii ) the size of banks ’ off - balance sheet exposures to the us sub - prime related structured finance products ; ( iv ) the activities, features and implications of new financial entities – conduits and other structured investment vehicles – that have been sponsored