programmes were introduced as short - term interim measures allowing to gain time for structural reforms. as you know, however, nothing is more permanent than the temporary and structural reforms show little progress, while the easy monetary policy now involves more risks than benefits due to its longevity. monetary policy in itself is not able to set the economies of advanced countries back to resilient growth, since there are structural limits and there is no room for reducing interest rates any further, i. e., they have already been negative in many countries. nonetheless, low interest rates in advanced countries were conducive to fast accumulation of external debt in the emerging market economies subjected to capital inflow and bubble formation. on the one hand, we realise that an exit from the easy monetary policy is fraught with an about - turn in capital flows and consequently the need to tighten monetary policies in emerging market economies. this may bring down the global economy ’ s growth rates even further. moreover, as a result of a quick monetary policy normalisation holders of these countries ’ bonds may incur losses and financial stability risks cannot be ruled out. on the other hand, a refusal to normalise monetary policy may lead to stagflation. thus, as a matter of fact, the central banks of major countries will have to repeat the exploit of odysseus : to pass between scylla and charybdis. this situation is fraught with mounting volatility in global markets and the bank of russia takes this into account while pursuing its monetary policy. we are moving consistently towards our target : annual inflation of 4 % in late 2017 and further. why do we need low inflation? ( although 4 % inflation is low only for russia, it is much lower in the overwhelming majority of countries ). first, low inflation abates macroeconomic uncertainty and risks for business. second, it stabilises household incomes, in particular those of the lowest - income families, and third, contributes to development of long - term lending and long money in the economy. as a matter of fact, low inflation is an integral part of the investment type of economic growth. considering all the external and internal challenges, a very cautious, moderately tight monetary policy needs to be pursued to achieve the inflation target. this is not the only one. decreasing inflation expectations of households and businesses are largely conducive to inflation reduction. therefore, confidence in bank of russia policy is very important. we are open for dialogue. we try to explain

a satisfactory financial condition. thanks to the new model to migrate to, the processes of bank resolution are sure to become less inexpensive, faster, more manageable and overall more effective. we will see banks under resolution being reorganised so as to ensure that financial recovery yields maximum results and raises investment appeal of such banks. concurrently, this will predetermine optimisation of the banking sector ’ s structure. both commercial banks and private investors would be able to enjoy the outcomes as they acquire well performing banks and those with capital top - up. apparently, the mechanism will be the subject for discussion with the bank community. looking forward, i would like to tell you that we have looked into potential risks this approach involves. here are our key findings. the risk of banking sector becoming nationalised. in our understanding, we are running no such risk, for two reasons. first of all, because of the minor role of the banks under resolution in the total banking sector. the 28 banks that became subject to resolution accounted for a mere 4 per cent of the banking sector ’ s liabilities. and we do not expect their importance to become any stronger. further, as i have noted, resolution should result in the sale of banks in the market ; therefore, we expect there to be no significant impact from the new approach on the correlation of public to private participation in bank capital. further on, on conflict of interests, that is, the risk that the quality of supervision over banks reorganised by the bank of russia - controlled institution may deteriorate. with a view to avoiding this risk, we intent to construct a ‘ chinese wall ’ to separate bank of russia supervision activities from the fund ’ s management company. we would draw on our experience with such ‘ chinese walls ’, for example, the one between monetary policy and supervision – a fully working arrangement. but, most importantly, the banks under resolution in the new model – once their capital is restored – would be obliged to comply with all regulations, and they should expect no easier ride. in such a way, we would get unprivileged supervision, that is, the one that grants no special status - related discounts to banks under resolution. let me now pass on to regulation, where we plan to implement a number of meaningful initiatives. as you know, our efforts to implement basel standards are ongoing. this year, for the first time ever, we have passed the basel committee test that recognised russian legislation as fully