safeguard the integrity of the euro. but the ecb cannot do it all alone. we will not do governments ’ work for them. it is up to them to undertake fundamental reforms, support innovation and manage public spending – in short, to come up with new models for growth. is the ecb not a prisoner of german budgetary orthodoxy in terms of the interpretation of its mandate? the ecb acts under the treaties, which have been ratified by all european countries. the treaties require each country to ensure the sustainability of its public finances. and this is a question of common sense. look at what happened when the credibility of certain countries ’ public finances deteriorated to the point where their access to the market was compromised. they had to undergo the painful adjustment programmes that you have just been referring to. it is the unsustainable debt and deficit levels that render countries prisoners of the markets. some people would like to see the ecb fight to combat unemployment, like the federal reserve. why do you refuse to do that? our main task is to maintain price stability. of course, insofar as our actions stabilise the economy, they help to reduce unemployment. however, we cannot reduce the structural level of unemployment, which is dependent on the smooth functioning of the labour market and its ability to better integrate those who have been excluded from it. taking the example of german growth, that has not come from the reduction of our interest rates ( although that will have helped ), but rather from the reforms of previous years. the euro has strengthened considerably against the us dollar. what are you doing to counter that and make the euro more competitive? i have no desire to speculate regarding the right euro / us dollar exchange rate. we have no objectives in terms of exchange rates. however, i recognise that a high exchange rate has consequences for growth and inflation in europe. which is to be feared more : deflation or a return to inflation? neither one nor the other. we are not experiencing deflation. prices are not falling in a sufficiently strong or generalised manner to entail the postponement of purchases and investment, and thus the kind of economic slowdown that we saw in japan. inflation is at a low level, well below the 2 % threshold, and should remain weak until 2015. that was why we decided to reduce our key interest rates, in order to have a buffer to curb the decline. what answer do you have for the growing number of europeans who no longer want

) for the euro area as a whole. by referring to increases in the hicp it was made clear that deflation is excluded from the definition of price stability. the may 2003 clarification : “ hicp inflation below but close to 2 % ” at the same time, we felt the need to convey even more clearly to the public that the governing council does not view all positive inflation rates of below 2 % as equally desirable. on 8 may 2003 we made it clear that, in order to fulfil its price stability objective, the governing council aims to maintain hicp inflation below but close to 2 % over the medium term. this was fully in line with our past practice and with medium - term market expectations. thus, the announcement did not change inflation expectations. the main argument for maintaining a low positive rate of inflation is that it helps to reduce to very low levels the probability that nominal interest rates will approach their lower bound of zero. obviously, the likelihood of nominal interest rates hitting the zero lower bound in the euro area is rather remote. this notwithstanding, introducing a preventive margin for inflation rates is advisable, not least since available evidence indicates that even a relatively small safety margin for inflation rates above zero is sufficient to largely eliminate concerns that the zero lower bound for nominal interest rates will become binding. there are other arguments for aiming at positive rates of inflation, such as the possibility of measurement bias in the price index and the inflation differentials in the euro area. overall, our assessment is that aiming at inflation below but close to 2 % over the medium term strengthens the public ’ s confidence that deflation need not be a concern. the anchoring of long - term inflation expectations in the light of past experience, it is clear that the announcement of the quantitative definition of price stability, in combination with the medium - term orientation of policy, has been an extremely valuable element of the ecb ’ s strategy. with its quantitative definition, the ecb has made a very significant contribution to the firm anchoring of inflation expectations. notably, it has provided a benchmark for inflation expectations, which in turn has considerably facilitated the conduct of monetary policy. indeed, as long as longer - term inflation expectations are firmly anchored, chances are high that the setting of wages and prices will be guided primarily by the ecb ’ s objective rather than by past developments. this significantly reduces the likelihood of temporary increases in inflation triggering harmful second - round increases in wages and prices, events which were fairly