a long way towards taking these concerns into account. however, monetary policy is not necessarily the most appropriate instrument to deal with credit or asset price imbalances. the use of macroprudential instruments targeted on the sources of financial exuberance may be more appropriate. the new european supervisory authorities can make an important contribution in this respect. let me just remark here that the ecb plays an important role in the european systemic risk board ( esrb ), to which it provides logistical, analytical and administrative support. an appropriate management of the interaction between macroprudential and monetary policy authorities will be crucial to success. the institutional arrangement adopted in europe appears well - suited to address any problem that may arise from the management of monetary policy and new macroprudential tools. it will certainly be important for there to be dialogue between the two bodies on policy issues that can affect systemic risk. °°° finally, let me mention the challenges to the construction of europe itself. the sovereign debt crisis is a real test of the solidity of european institutions and of the political will in europe to do whatever is needed to ensure the achievement of economic and monetary integration. the european surveillance of national budgetary policies proved to be inadequate. for a long time exceptionally favourable financing conditions have concealed the differences between member countries ’ underlying conditions and economic policies and the absence of really binding common rules. the global crisis has accentuated investors ’ perception of risk and revealed weaknesses in the architecture of the union. the exceptional response of national governments and european authorities limited the risk of contagion and safeguarded the area ’ s financial stability. the financial support granted to the countries in greatest difficulty allows them to proceed with adjustment sheltered from market volatility. it is not a fiscal transfer between countries and it is subject to stringent conditions. there are no shortcuts available : the response to the debt crisis lies first and foremost in national policies, in the complete implementation of the adjustment plans that have been agreed. solidarity among the member countries in the union must be matched by a sense of responsibility and compliance with the rules. looking ahead, i believe that the steps that have already been taken to tackle the weaknesses of the european architecture are important. the proposals of the eu commission and the council reinforce surveillance over budgetary policies. they can be made more ambitious by making procedures more automatic so as to shield them from the arbitrary nature of political negotiations. the european parliament is having an important influence in this regard. the extension of rules similar

of signs of normalisation in money markets and in the access to market - based financing by most banks in the euro area ; the recourse to eurosystem operations has declined. at the same time, concern about the sustainability of the public finances in some euro - area countries has led to strains in a number of banking sectors and a small number of institutions remain reliant on central bank liquidity, accounting for a substantial share of the overall refinancing volumes. the continued high degree of uncertainty about the macroeconomic and financial environment requires a careful assessment of the overall situation and outlook. non - standard measures need to be phased out to the extent that they are no longer needed to support the functioning of the transmission of monetary policy to the economy ; we must make sure that liquidity support to the economy is maintained as long as appropriate ; but also that we do not sow the seeds of future imbalances and create addiction to our liquidity. at the same time, the setting of our policy rates must be adjusted with the aim of delivering on the ecb ’ s mandate, – to maintain price stability for the euro area in the medium term – in a pre - emptive manner, in order to avoid any deterioration of inflation expectations. it must be fully clear that neither the sovereign debt crisis nor the abnormal dependence of some banks on central bank liquidity can divert the ecb from pursuing its primary objective. °°° secondly, challenges to monetary policy come from the area of financial stability. the financial crisis and the heightened emphasis on financial stability have raised a number of questions on the relationship with monetary policy. it has shown that a closer interaction is needed between macroeconomic and macroprudential analyses, although it has also brought out that there is no real trade - off between the objective of price stability and the support that the ecb can lend to other areas. bis central bankers ’ speeches in this respect, i believe that while synergies must be exploited to the full, the respective roles and responsibilities must remain clearly distinct. monetary policy must keep its focus on preserving price stability over the medium term. as i just mentioned, the benefits of a sound monetary framework have been made more – not less – evident by the crisis. at the same time, monitoring the emergence of monetary and credit imbalances and asset price developments is one important element in a robust monetary policy strategy ; a medium - term orientation is also crucial. the ecb ’ s monetary policy strategy already goes