##c ’ s minutes also explained that the bank would be taking forward operational work to assess the feasibility of implementing negative interest rates, should this be required in future. commencing that operational work underlines the mpc ’ s commitment to having negative rates as a potential tool in the monetary policy toolbox. some commentators have interpreted the start of this work as conveying a signal about the likelihood of the mpc introducing negative rates in the near - term. the minutes contained no such signal. the operational work necessary to assess the feasibility of negative rates is likely to take a number of months. after that work is complete, judgements on negative rates will depend on the economic outlook at the time and in particular on whether that necessitates further monetary stimulus. if that condition was satisfied, any decision on negative rates would then depend on whether the balance of costs and benefits from using this tool was positive and whether this cost / benefit balance favoured negative rates over other monetary tools. all three of these conditions would need to be satisfied before negative rates became a reality. at present, none of those conditions is in my view satisfied. conclusions the economy faces uncertainties that are extraordinarily large and risks that are skewed to the downside. in this environment, caution is natural and understandable. it is important policymakers are vigilant to these risks and uncertainties and responsive to them with their policy actions. it is important they provide, as they have so far, economy - wide insurance to support businesses and households during these troubled times. that has been the approach of the mpc so far and it will continue to be its approach if new risks arise. at the same time, it is important the unexpectedly positive progress the economy has made so far this year is not overlooked. the economy has recovered further and faster, and has shown far - greater robustness and resilience, than anyone expected. this positive news has received less attention than it deserves, both on its own terms and because of what it may tell us about the economy ’ s resilience to future shocks. my concern at present is that good news on the economy is being crowded - out by fears about the future. this is human nature at times of stress. but it can also make for an overly - pessimistic popular narrative, which fosters fear, fatalism and excess caution. this is unhealthy in itself but, if left unaddressed, also risks becoming self - fulfilling. i

the organisers for this invitation to participate in the annual conference of the marshall society. it is a pleasure to be here and support the marshall society ’ s quest to further young economists ’ interest in economics. the subject of this year ’ s conference is ambitiously on the power of policy to solve problems and shape the future. in modern times, monetary policy is usually considered the most powerful of the macro policies to stabilise the economy. it was not always assessed like that and it is important to be aware of its limitations. for instance, it is sometimes said that the world avoided the worst in 2008, only because central banks made bold use of their tools, cutting rates and providing abundant liquidity. the truth is that without the significant use of fiscal policy in 2008 and 2009 stimulating our economies and supporting the banking sector, the meltdown of the financial system could not have been avoided. at their meeting in toronto in 2010, the g20 bis central bankers ’ speeches decided to reverse the policy and embarked in fiscal consolidation, to different degrees, leaving monetary policy to deal with macroeconomic stabilisation. in this context, it is easier to explain by fiscal policy short - term effects, the double dip suffered by the euro area economy after 2011, than by the behaviour of monetary policy. the tasks for monetary policy became particularly challenging in the euro area, in view of the imbalances built prior to the crisis by private debt expansion and the subsequent sovereign debt crisis of 2010 – 2012. 1 the resulting financial fragmentation made the proper transmission of monetary policy more difficult. the first part of my remarks today will be dedicated to briefly review the experience of the past seven years in order to illustrate two broad features of the governing council ’ s response to the evolving phases of the crisis. the first feature is naturally that all ecb actions have always been guided by the compliance with its mandate, which is to maintain price stability as a primary objective as i will clarify below. the second feature is that, in the pursuit of its objectives, the ecb has been very flexible in adjusting and expanding its toolkit. flexibility has been an important principle to ensure that economic and financial shocks would be met by the most efficient response at any point in time. without going into the details of the individual instruments that we have operated, i will identify two broad phases in our response to the crisis. the two phases are characterised by different uses of our balance sheet as an instrument of monetary policy. this will lead me to comment on