. would it not be better to wait until the elections have been held – also to prevent a purchase programme for government bonds from being interpreted as a form of financial aid? not at all. we are independent, and that also means that we do not link our decisions elections that might be held here and there. we will do what we need to do, and we will do it at the precise time that we deem to be appropriate. you emphasise that the ecb is not a political institution. but how credible is that, given that the ecb has long become the crisis manager for the euro area? that risk is indisputable : it is precisely when other parties involved, such as the eu commission and the national governments, do not take action, or do so only hesitantly, that pressure on monetary policy increases. prevailing opinion in the governing council is, bis central bankers ’ speeches however, that we have not moved beyond the limits of our mandate with our new instruments. but the longer it takes for countries to do their homework, and the longer the economic crisis persists in europe, the greater is the danger that the pressure on the ecb will rise. but it is precisely the ecb ’ s intervention that reduces the pressure on governments to take action. i see that differently. our policy does not change the fact that structural reforms are highly necessary. the best incentive for such reforms should be the high level of structural unemployment, on which monetary policy has little impact. in some euro area countries, unemployment rates are in the range of 20 % to 25 %. if that isn ’ t an incentive for taking countermeasures, what is? it, of course, makes life easier for governments if they can take on new debt at a lower interest rate. that is why we advocate a strict application of the stability and growth pact. irrespective thereof, however, we must fulfil our mandate of keeping prices stable. conversely then, how dependent is the ecb on the success of governments ’ reforms? if no way is found to overcome unemployment and indebtedness, how will the ecb ever be able to return to a normal monetary policy? our measures can, of course, only take full effect if the economy and the financial markets work well. that does not change our mandate, but it explains why we occasionally address advice to the political domain, for instance, that the stability and growth pact should be complied with. unfortunately, we are seldom listened

of the euro area. also, at a regional level outside europe, progress is ongoing in asia towards strengthening the asian financial safety net, known as the chiang mai initiative multilateralisation ( cmim ), with the doubling of the cmim fund to usd 240 billion. in parallel, important steps have been taken to mitigate the spreading of risks within a highly interconnected global financial system, making it more resilient to unexpected events : bis central bankers ’ speeches systemically important financial institutions, which contribute to the spreading of risks given their high level of interconnectedness, will be subject to stricter capital requirements under the basel iii agreement ; financial infrastructures have been made more resilient. first, the financial stability board is working on safeguards aimed at promoting global clearing in order to facilitate access to, and the use of, global clearing houses. second, regulators and overseers have just finalised a new set of regulatory principles for financial market infrastructures aimed at ensuring that any such infrastructures, whether domestic or global, will be better able to withstand shocks and unforeseen events. moreover, regulators and overseers are required to adopt regimes for effective cooperation with each other. 2. further improvements to global financial stability nets while all these measures have undoubtedly made an important contribution to stabilising the global economy, many observers have argued that gaps remain in the current global financial safety nets. existing mechanisms for dealing with crises have been seen as being deficient in three respects : ( i ) insufficient amount of financial fire - power ; ( ii ) insufficiently flexible or fast decision - making and ( iii ) insufficient coordination with respect to both financing and surveillance. these deficiencies have been seen as leading countries to increase their foreign exchange reserve holdings. for the holders, the great attraction of reserves is that they provide instantaneous and unconditional liquidity. however, the accumulation of a large stock of reserves is not only based on precautionary motives. moreover, even at the level of the individual holder, there are downsides as reserves come with a quasi - fiscal cost. 1 how can we go forward and what can be done differently? overall, there is widespread agreement about what a global mechanism should do : ( i ) reduce the demand for selfinsurance through reserves accumulation ; ( ii ) provide fast - disbursing financial assistance in large amounts to the “ innocent bystanders ” ; and ( iii ) reduce global imbalances. 2 however, it is clear