ecb governing council's monetary policy decisions are therefore just as relevant to the swiss franc zone as financial market regulation and the institutional stability of european monetary union. before i delve deeper into these topics, i would like to lay out three core talking points. 1. first, european monetary policy has ventured deep into uncharted territory, and there is a growing risk of it being subjugated to fiscal policy. in what is admittedly currently a difficult monetary policy environment, risks must not be underestimated, nor should the capabilities of monetary policy be oversold. 2. second, in order to stabilise monetary union over the long run, its institutional framework needs to be reformed. the balance between actions and liability for their consequences needs to be restored. bis central bankers ’ speeches 3. third, significant progress has been made in financial market regulation ; our banking system is thus more robust today than before the financial crisis. however, the regulatory agenda has not yet been fully concluded for the banks and shadow banks alike. 2. monetary policy in the euro area let me begin with monetary policy. as you know, at its meeting nearly two weeks ago, the governing council of the european central bank ( ecb ) adopted an even more accommodative monetary policy stance. the move that gained the most public attention was the renewed cut in the ecb's policy rates. the main refinancing rate is now at 0 %, and the interest rate on deposits with the eurosystem was cut further to the current level of - 0. 40 %. but on top of that, the governing council also adopted a rather extensive package of measures : beginning in june, the eurosystem will be providing a further set of targeted longer - term refinancing operations ( tltros ) with which banks can acquire liquidity for a term of four years at extremely favourable conditions – usually at the 0 % main refinancing rate throughout the entire term. banks that grant additional loans – except for loans for house purchases – will even get something back : in the most favourable case, the difference between the main refinancing rate and the deposit rate in effect at the time of allotment. in addition, the volume of monthly bond purchases was raised from €60 billion to €80 billion. the idea here is to also purchase, within this overall volume, non - financial corporate bonds issued in the euro area. at the same time, the governing council

not mean " sometime in the distant future ", nor does it mean " as fast as possible and at all costs ". the term " medium run " thus consciously contains a certain degree of vagueness over the precise time horizon. this gives monetary policy the flexibility it needs to respond appropriately to a myriad of different types of macroeconomic shock. monetary policy would surely be unable to cope with the expectation of always being able to guarantee an inflation rate of just under 2 %, for alongside the justified desire to steer inflation back towards the 2 % mark, monetary policy must also keep in mind that there are risks associated with the protracted low - interestrate policy and the non - standard monetary policy measures. one expression of this is that the ecb governing council is having to fend off increasingly absurd demands – such as showering the population with " helicopter money ". ladies and gentlemen telling you lots and lots about the risks and side - effects of monetary policy would probably be akin to " carrying coals to newcastle ". you all know that an ultra - accommodative monetary policy brings with it long - term risks to the stability of the financial system. bis central bankers ’ speeches first, because of the mounting risk of financial market bubbles. this is why some euro - area member states have now also taken what are known as macroprudential measures in order, for instance, to counteract excesses in real estate markets. of course, whenever such financial stability risks are looming, this represents a challenge, above all, to macroprudential policy. and a stability - oriented central bank should not seek a trade - off between monetary stability and financial stability ; this will soon lead to monetary policy arbitrariness. however, a monetary policy which is intended to ensure longer - term price stability cannot completely ignore these risks, for at the end of the day, financial stability risks generally also threaten price stability – as was clearly shown by the financial crisis. second, because profitability in the banking sector can take a hit, the severity of which rises the longer the period of low interest rates persists and the flatter the yield curve is. as central bankers, our concern here is naturally not the profits generated by the banks per se ; instead, it is the banks'ability to transmit monetary policy stimuli. and this capability is not independent of capital adequacy, as the latter plays a major role in shaping banks'ability to cushion shocks. it is all the more important,