’ t countries quicker to implement reforms? market discipline is indeed important. but the crisis has again shown that markets can rush from exuberant optimism to extreme pessimism, often reacting late and abruptly too. you say that crisis countries have benefited from the ecb ’ s support programmes. but what good are they to a country such as the netherlands? the euro area countries are strongly interdependent. the fragility of your neighbours also affects you. people in the netherlands, or in germany, should not forget that. and the netherlands, too, would have been very severely hit if the ecb had not intervened in 2012 when the euro was under threat. but one size cannot always fit all. in some countries, financial conditions were very poor ; in other countries, monetary stimulus may not have been as necessary. but our mandate is to contribute to the price stability of the entire euro area. that is also in the netherlands ’ national interest. but the ecb ’ s low interest rate policy also has a destabilising effect. the european insurance and occupational pensions authority ( eiopa ) warned last week that the capital position of dutch pension funds was under pressure from low interest rates. bis central bankers ’ speeches a far more serious destabilising factor, for society as a whole, would be an economic depression. long - term interest rates have been declining for around 20 years. after all, the low interest rates reflect economic fundamentals such as demographic factors and productivity and cannot be solely attributed to the policy of the central bank which mainly needs to make sure that inflation expectations are well anchored. monetary policy always has a redistributive impact, which can be adjusted by the state if need be. a frequently - heard complaint in germany is that savers are worse off. those who also have every right to complain are those who lose their job because the economy is too weak owing to inadequate policies. can the ecb afford to run counter to the ideas on monetary policy in the largest country in the euro area, germany? we look at the whole euro area and we are not here to represent particular countries. we are aware of the objections in some countries. of course you have to take them into account and properly explain that we are acting in order to respect our mandate. that is admittedly rather difficult. at the meeting in january, ecb president mario draghi hinted at even more monetary stimulus. why do we need even more? he said that the ec

in constantly changing circumstances. today i would like to discuss with you our recent experience of decision - making in an uncertain world. i will outline how the crisis developed and then describe how we at the european central bank ( ecb ) responded – the kinds of information we draw on, the tools we use and the principles on which we base our decisions. i will close with some brief reflections on dealing with uncertainty. ii. uncertainty and the crisis the origins of the crisis lay in changes in the economic and financial environment over the past two decades. during that time, there was a marked decline in the volatility of such aggregate economic indicators as total household consumption and total business bis central bankers ’ speeches production. this led to a widespread perception that we were living in very benign economic conditions. at the same time, some developed countries underwent a process of financial deregulation and innovation aimed at improving efficiency. new financial products were developed with the promise of enabling financial institutions to manage the risks in their lending activities more effectively. as a result, larger segments of the population obtained mortgage financing, and credit generally was more easily available. but the promised benefits of financial risk management turned out to be illusory. risk did not disappear, indeed in many cases it was magnified. and the process of deregulation led to a huge increase in private indebtedness and an accumulation of financial imbalances. at the global level, a number of developed economies were able to finance increased household consumption by borrowing from fast - growing emerging economies that had an abundance of savings. these sustained global imbalances contributed to lower interest rates, which further encouraged the process of credit creation in countries that were receiving capital inflows. it was clear to many careful observers that this process eventually should come to a halt. with the considerable benefit of hindsight, warning signals of the subsequent financial distress in the data for 2006 – 07 are clearly evident. in the name of my colleague central bankers, i gave myself a clear warning in january 2007 on the likelihood of a major market correction due to a significant under - assessment and under - pricing of risks in the financial markets. but the specifics of how a crisis might be triggered and the course of its subsequent propagation proved hard to predict in real time. ultimately, the crisis was ignited in august 2007 by unprecedented tensions in the interbank market, in which financial institutions lend to and borrow from one another. following the bankruptcy of lehman brothers in september 2008, the financial market tensions