reduced ( released ) by the authorities ( if necessary, all the way down to zero ) when risk materialises. for a given level of an institution ’ s cet1 ratio, the release of all or part of the ccyb requirement means that the management buffer of the bank automatically increases. what do we know about the effectiveness of this framework? in contrast to microprudential policy, the effectiveness of macroprudential policy cannot be analysed simply by assessing whether a certain increase in the level of capital allows a given bank to absorb a systemic shock of a given intensity. this is certainly relevant, but the goal of macroprudential policy is also to induce banks to absorb losses while continuing to provide credit to the real economy in times of stress and therefore to smooth financial cycles. in this regard, the effectiveness of macroprudential buffers depends on their usability, which can be defined precisely as the willingness of banks to dip into the buffers in order to maintain the flow of credit to the real economy. if buffer usability is low, banks will have greater incentives to deleverage in response to adverse macro - financial shocks. the usability of voluntary buffers should not be taken for granted. market pressure and profitability considerations could provide incentives to banks to conserve these resources, and deleverage instead. 5 uncertainty about the cost and time path for rebuilding these buffers could also disincentivise their use. the academic literature generally shows that higher capital ratios allow banks to satisfy loan demand more easily, in particular in periods of stress. however, there is more limited agreement on whether the relevant factor is the total level of capital or the voluntary buffer, that is to say the gap between the actual level of capital and the capital requirements. this issue is highly relevant to the design of the macroprudential framework. if the only relevant factor for smoothing financial cycles is the absolute level of capital, then macroprudential policy should concentrate its efforts on the accumulation of non - releasable buffers, assuming that banks will make use of them if they incur losses. in contrast, if the relevant factor is not only the absolute level of capital, but the distance from capital requirements, then the availability of releasable macroprudential buffers could basel co mmittee o n banking supervision. ( 2010 ). “ guidance fo r natio nal autho rities o perating the co untercycl

up the stability and growth pact, more automatic rules and stronger independent fiscal institutions, as well as a stronger european fiscal board, could also help achieve this objective. also, the development of a common fiscal capacity that enables an aggregate fiscal stance to be defined and applied in the area would supplement the scope for national fiscal action and, as i have already mentioned, the stabilising efforts of monetary policy. completion of the current design of emu and providing it with solid governance are priorities that will, however, require broad consensus and political will. monetary policy i would now like to discuss the role monetary policy has played in these years and that which it could play in the response to future crises. when the last crisis broke out, central banks slashed interest rates, which rapidly reached near - zero levels in some cases, such as that of the european central bank ( ecb ), rates even turned negative. in this context, central banks had to implement a series of novel, or “ unconventional ”, measures. these measures included asset purchase programmes, medium - and long - term lending to the banking industry under advantageous conditions, and announcements about the future course of monetary policy, known as forward guidance. the empirical evidence shows all these measures to have been effective at cushioning the impacts of the economic crisis and supporting the subsequent recovery, and they now form part of central banks ’ toolkit for the future. against this background, what scope is there for monetary policy action in the event of a future crisis? as the inflation outlook improves in the future, interest rates may be expected to rise gradually towards their long - term equilibrium rate. the distance between this level and the effective lower bound on interest rates – i. e. the level below which further rate cuts would be counter - productive as a means of stimulating the economy – will determine the future scope for conventional monetary policy. we now know that the lower bound on interest rates in the euro area is not zero, as was traditionally believed, but a negative number which, although difficult to quantify, is probably not far below the current deposit facility rate of 0. 40 %. economic theory and the empirical evidence suggests that demography is one of the factors underlying the long - term interest rate. specifically, demographic developments in recent decades in comparable countries, characterised by declining birth rates, increasing life expectancy, and a rising ratio of pensioners to workers, seems to have lowered the longterm equilibrium or “ natural ” interest rate and is likely to continue to