information about the most likely outlook for our policy. once you stop net asset purchases the signaling aspect of the app disappears and you therefore have to be much more precise about the future path of the short term rates. we will then have to re - specify our forward guidance on interest rates. most likely, we will calibrate it as appropriate for inflation to remain on the sustained adjustment path to our inflation aim. so, as in the past, we will ensure that monetary policy controls the short end of the yield curve. we will proceed at a gradual pace, or a measured pace as mario draghi said, in a way that is most appropriate for inflation convergence – taking into account continued uncertainty about the size of the output gap and the responsiveness of wages to slack. you said you would have a discussion about revising your guidance in early 2018. should you revise the guidance at the same time as you decide what happens beyond september? indeed, early this year, we have removed the easing bias on our app. looking forward, i wouldn ’ t say there is a date or a deadline. the fact that the two of us are talking about this now is already very telling. however, i would not revise the guidance too early, because that could send wrong signals about the end of our net asset purchases, which in any case are intended to run until the governing council sees a sustained adjustment in the path of inflation. when the first rate hike comes, will you only raise the deposit rate until the interest rate corridor is symmetrical again? i think it is premature to discuss this question. what counts in the markets is the level and the expected path of the very short term rate at which banks borrow from each other. because of sizeable excess liquidity expected to prevail over the coming years, the deposit facility rate is the policy rate that can steer those interbank conditions most effectively. benoit cœure argued that given your oversized balance sheet, you can retreat from asset buys without risking an unwarranted rise in term premia. do you agree with this argument? the float – the share of government bonds held by the private sector – has decreased with our purchases. the marginal intervention you have when the float is smaller has the potential to have some bigger effects on prices. but it is a relatively short term consideration. the main argument, and i think it is widely shared, is indeed that the stock becomes very important. but we need to consider that, as the stock ages

. without this massive state intervention, the financial system would have collapsed with an accompanying depression in the real economy. among the various causes of the crisis, two main ones stand out. first, the excessive growth of a loosely regulated financial sector in search of risky high yields and profits from rent seeking. second, the development of sizeable global macro imbalances, with the high savings of many emerging countries flooding the financial markets of advanced see haldane, a., the $ 100 billion question, bank of england, march 2010. see haldane, a., the debt hangover, bank of england, january 2010, p. 15. economies, especially the united states, and contributing to lower interest rates and asset bubbles. the crisis taught us some important lessons that economic policy cannot now ignore : 1. the financial sector is not self - regulating and self - equilibrating and can generate very large economic crises ; 2. excessive credit growth and leverage almost always ends in a crisis generated by a collapse in demand and an unavoidable deleveraging of balance sheets ; and, 3. maintaining price stability in the market for goods and services, i. e. controlling inflation, is not enough to avoid overshooting and bubbles in the price of assets – from housing to the financial markets. humanity has been taught these lessons several times, but always seems to forget them. when this happens, regulation and supervision become loose and the financial system can then come off the rails on its own. this time in particular, this effect happened as a result of a “ cognitive capture ” of regulators by the dominant economic theories, which have much to answer with respect to the crisis. the prevailing macroeconomic theory saw the economy as a simple system determined by fully rational individuals that could anticipate a future perturbed only by some random shocks with well - behaved distributions and by quickly self - equilibrating markets. the main macro model did not have a financial sector, as it was supposed to work efficiently and smoothly without creating turmoil or bankruptcies. on the other hand, the so - called modern finance theory maintained the “ efficient market hypothesis ” ( emh ), according to which financial markets process all relevant information for the proper valuation of assets. in consequence, market prices are always right, as they reflect fundamentals, thus precluding the possibility of bubbles and other irrational phenomena like herd behaviour or long periods of mispricing. another feature of modern finance theory is that