inflation figures translate into second - round effects and would hence entail a prolonged period of high inflation. the higher commodity prices – which, as i said earlier, mainly reflect the good performance of emerging economies and are therefore, at least in that sense, a blessing – are a real impoverishment for the euro area economy which cannot be avoided. higher wage claims or price increases seeking compensation for such a deterioration in the terms of trade only postpone necessary adjustments and only lead to a longer period of higher inflation without any longer - run real benefits. therefore, a solid anchoring of inflation expectations is essential and the governing council will do whatever is necessary to maintain price stability over the medium term. the governing council acknowledged that the current monetary policy stance does remain accommodative. “ is this increase the first in a series of interest rate rises? ”, is therefore a question which observers have often raised over the past month. as you all know, the governing council never pre - commits but at the same time, i think our strategy is very clear and markets and observers alike do realise that we will do whatever is necessary to ensure price stability will be maintained. markets currently anticipate a gradual withdrawal of monetary accommodation and i personally think that is no unreasonable assumption, given the clear upside risks to price stability i mentioned earlier. needless to say, it is incoming data and our assessment of the economic outlook that will ultimately determine our course of action and the pace at which monetary accommodation will be withdrawn. another question people often raise is how such an increase in interest rates squares to the ongoing sovereign debt turmoil, which brings me the second challenge i want to discuss. i see two ways in which the sovereign debt turmoil enters our discussion. first, the turmoil does have important bearings on the transmission of monetary policy. indeed, that was the very motivation for setting - up the securities market programme in may 2010 and for re - introducing the regime of fixed - rate full allotment for longer - term operations, which is still in place at the current juncture. it will be maintained for as long as necessary, and at least until july 2011. that should avoid that banks in need of short - term funds are being cut - off from liquidity in case banks with excess funds are no longer willing to lend to them because of uncertainty on counterparties ’ exposure to sovereign debt. at the current juncture, we deem these non - standard measures an essential part of our monetary policy toolkit as they

the treaty because only 5 member states were ready to implement them at the time. second example is the social charter, that was negotiated together with the maastricht treaty, but that was not acceptable at the time for the british government. a third example of flexibility brings me back to my own business. as you surely know only 12 out of the 15 current member states have until now adopted the single currency. according to the treaty, member states that have not yet adopted the euro are called " member states with a derogation ". two categories can be distinguished. the uk and denmark make up one category : these member states got respectively an opt - in and an opt - out. the second category consists of the member states that can't adopt the euro because they do not yet comply with the well - known convergence criteria. only sweden is currently in this position, but very soon a number of new member states will join sweden, having the vocation - and even the legal obligation - to adopt the euro at the right moment. it is very obvious that the member states of the euro area are more advanced in economic integration than the others are. so, this is clearly a case of " closer co - operation ", which has taken shape in the creation of a forum where the ecofin - ministers of the euro area can discuss the economic situation in the world, in the european community and in the euro area, and its consequences for economic policy making. this forum is, as you know, called the " eurogroup " and i'm sure that minister reynders will tell you everything about it after lunch. so to us, central bankers, closer co - operation or models of flexible integration is not some kind of theoretical exercise, we live with it constantly. ladies and gentlemen, my feeling is that the royal institute and the national bank have chosen for the colloquium of today a topic that is very much alive in the ongoing debate about the future institutional framework of european integration. the fact that we could find a series of utmost distinguished speakers ready to discuss this topic today with you, is a further demonstration of its importance.