the favourable impact of the recent monetary policy measures on aggregate demand, and by the impact of the lower euro exchange rate, the base effects that will materialise later in 2015 and somewhat higher oil prices in the years ahead, inflation rates are expected to increase consistently over the short and medium term. the ecb will continue to closely monitor the risks to the inflation outlook. in this context, the governing council will focus in particular on the pass - through of our monetary policy measures, as well as on geopolitical, exchange rate and energy price developments. our monetary policy continues to aim at safeguarding price stability. since mid - 2014 we have taken a number of both conventional and unconventional measures. monetary policy measures adopted in the second half of 2014, such as the tltro, cbpp3 and abspp, had resulted in a material improvement in terms of financial market prices. in january 2015, the governing council launched an expanded asset purchase programme to address the heightened risks of too prolonged a period of too low inflation, encompassing purchases in the secondary market of euro - denominated investment - grade securities issued by euro area governments and agencies and european institutions. we intend to purchase private and public securities until end - september 2016. in any case, we will continue the purchases until bis central bankers ’ speeches the governing council sees a sustained adjustment in the path of inflation which is consistent with its aim of achieving inflation rates below, but close to, 2 % over the medium term. in its assessment, the governing council will follow its monetary policy strategy and concentrate on trends in inflation, looking beyond any unexpected movement of inflation in either direction if it is regarded as transient and deemed to have no implications for the medium - term outlook for price stability. there is clear evidence that the policy measures are effective, as financial market conditions and the cost of external finance for the private sector have eased considerably over the past months and borrowing conditions for firms and households have improved notably, with a pick - up in the demand for credit. as regards fiscal policies, we concur with the imf weo assessment that the by and large neutral euro area aggregate fiscal stance in 2015 continues to appear broadly appropriate, although it masks significant heterogeneity across countries. many euro area countries still face significant consolidation challenges in order to reduce high debt ratios and to ensure fiscal sustainability. the flexibility within the stability and growth pact should be used wisely and should not lead to increased debt sustainability risks and making countries vulnerable to economic shocks in

, by contrast, would have an advantage, not least because at1 coupons are tax - deductible in most member states. to sum up : banks would become less resilient and the playing field less even. but let me come back to basel. the reforms we agreed on in basel do make sense, and they strengthen the resilience of banks. a key feature of the reforms is their global nature. they are designed to ensure not only safer and sounder banks but also a level playing field. so if reforms are not implemented as agreed, the playing field will become uneven, opening the door to regulatory arbitrage. but regulation is not the only game in town, of course. supervision counts too. and although supervisors need rules to guide their work, they see that not everything can be or should be captured by rules. global reforms such as those devised in basel and their transposition into european law cannot be perfectly tailored to each and every business model that banks pursue. at best, rules can cover the average case. this is particularly true in a sector that is changing as quickly as banking. so it is up to the supervisor to adapt the capital requirements to a bank ’ s specific risk profile in order to cater for deviations from the average case. to this end, the rules should be principlebased and leave sufficient discretion to the supervisors. in the european context, this need is even greater, as nowadays, we often have to deal with 19 slightly different national rules applying to the same case. 2 / 3 bis central bankers'speeches common principle - based regulation, applied to all 19 countries, would allow supervisors to cater for bank - specific risks in their national environment, thus ensuring a level playing field. so, let me conclude. the overarching question is : have the reforms so far helped to make the banking sector a safer place? my answer is : yes they have, but they still need to be finalised. the key point is to implement the reforms, to turn them into actual law. so, we cannot stand still ; we have to move on. and under no circumstances should we move backwards. thank you for your attention. 3 / 3 bis central bankers'speeches