was merely a theoretical notion taken into account when characterising the solutions of monetary models. it has, however, become a concrete concern for monetary policy in the last two decades, first in japan, then in most other developed economies. central banks have consequently become interested in the formerly abstract zlb topic. and, because storage and transportation costs of cash are non - negligible in reality, the notion of an “ effective lower bound “ of policy rates has emerged that is lower than zero. that monetary theory is thinking ahead once again and investigating options to remove this constraint is in my view welcome. it is therefore a pleasure to be at this conference and i am looking forward to learning more about all the proposals presented today. j. r. hicks, 1935. “ a suggestion for simplifying the theory of money ” economica, new series, vol. 2, no. 5 ( feb., 1935 ), pp. 1 – 19 bis central bankers ’ speeches in my remarks, however, i will argue that while the effective lower bound for short - term rates exists, it does not in fact impose a binding constraint on the effectiveness of monetary policy. there are readily available tools for dealing with the lower bound constraint that at the ecb go under the name of “ non - standard monetary policy measures ”. moreover, even if structural changes in payment habits could soften the constraint on short - term policy rates imposed by the effective lower bound, i consider such ideas – in the euro area at least – to be for tomorrow and not for today. the effective lower bound is not at zero let me begin however with an important question : where is the effective lower bound in the euro area? as you know, the ecb operates on the basis of the corridor system. we have an interest rate at which we normally provide most of our liquidity to monetary and financial institutions, the rate on the main refinancing operations, or mro rate. we then have the marginal lending rate – a rate incorporating a spread over the mro at which banks can obtain overnight liquidity from our standing marginal lending facility. and we finally have the deposit rate, that is, the interest rate on the deposit facility where banks can place their reserves in excess of the reserve requirement and which is fixed at a spread below the mro rate. since our september 2014 monetary policy decisions, the mro rate has been fixed at 5 basis points, the marginal lending rate at 30 basis points, and the deposit facility

- s64. 9 mckay, a. and r. reis, ( 2016 ), “ the role of automatic stabilizers in the u. s. business cycle ”, econometrica, 84, 141 – 194. 10 mckay, a. and r. reis, ( 2016 ), “ optimal automatic stabilizers ”, nber working paper 22359, cepr discussion paper 11578. 11 hall, r. e. and r. reis, ( 2015 ), “ maintaining central - bank solvency under new - style central banking ”, nber working paper 21173, cepr discussion paper 10741, and hall, r. e. and r. reis, ( 2016 ), “ achieving price stability by manipulating the central bank ’ s payment on reserves ”, nber working paper 22761, cepr discussion paper 11578. 12 see, for example, brunnermeier, m. k., langfield, s., pagano, m., reis, r., van nieuwerburgh, s. and d. 3 / 4 bis central bankers'speeches vayanos, ( 2016 ), “ esbies : safety in the tranches ”, european systemic risk board working paper 21, reis, r., ( 2013 ), “ the portuguese slump and crash and the euro crisis ”, brookings papers on economic activity, 44, 143 – 210, and reis, r., ( 2015 ), “ looking for a success in the euro crisis adjustment programs : the case of portugal ”, brookings papers on economic activity, 46, 433 – 458. 4 / 4 bis central bankers'speeches