of governments, and their incentives to embrace consolidation are weakened, even though fiscal buffers are more important in the euro area than elsewhere. eventually, there might be increasing pressure on the eurosystem to make high debt sustainable through low interest rates. unfortunately, these market forces are the only mechanism left to set incentives for sound public finances as my perception is that the european commission has basically given up on enforcing the rules of the stability and growth pact. ladies and gentlemen unconventional measures not only change the risk - reward calculus of monetary policy. they also change its character. the monetary policy toolkit of the eurosystem is modelled around the idea of an “ open market economy with fair competition ". that means, in particular, that while monetary policy needs to be effective, it also has to keep market distortions to a minimum and treat all sectors similarly. that ’ s why the eurosystem has, for a long time, intervened only at the very short end of the money market. the other interest rates and prices were allowed to move freely. but most unconventional tools intervene directly in other markets. this makes it more difficult to contain market distortions. interventions in individual market segments also harbour the risk that additional interventions might have to follow in order to curb their distortional effects. more monetary policy fine - tuning leads to ever more fine - tuning. to sum up, then, my second conclusion is this : unconventional instruments should be used with extra care – even if they are used only temporarily. and we shouldn ’ t forget that our concept of price stability is a medium - term concept. so monetary policy doesn ’ t need to respond automatically whenever inflation deviates from levels consistent with the definition of price stability. and adopting a longer - term perspective to monetary policy allows policymakers to also take into account the less favourable risk - reward calculus of unconventional measures. this is exactly why the monetary pillar of the eurosystem ’ s monetary policy strategy is so important, because it sheds some light on the longer - term risks to price stability. but i am well aware that a wait - and - see attitude won ’ t help us regain room for manoeuvre while inflation is low. it will take something else for that to happen : stronger growth and more resilient economies. 3 fostering growth an economy that is growing faster can pay investors higher real interest rates. stronger growth – productivity growth, in particular – would therefore raise the long - term real interest rate. currently, long - term interest rates

altogether. however, in the medium to long term, a monetary policy that followed a more symmetric course would do more to dampen damaging financial cycles than a monetary policy that merely tries to limit damage after the event using aggressive interest rate measures. here, the eurosystem ’ s monetary policy strategy already possesses such a stabilising element in the shape of its monetary analysis. this is especially suited to the analysis of long - term developments. the recent financial turmoil has shown that the often - criticised monetary and credit analysis has a valuable role to play in monetary policy analysis. conclusion the financial crisis means the greatest challenge for monetary policy in decades. policy responses have to take into account the specific institutional environment under which it operates. thus, policy responses might somewhat differ among countries even when the underlying shocks are similar. the eurosystem has responded in a decisive way to the emerging financial tensions. these measures have reflected the specific circumstances of the euro area – and will continue to do so. in the euro area fiscal policy is also contributing to dampen the economic downswing. this is also true for germany, where automatic stabilisers and discretionary measures cause a massive swing in deficit figures in this year and next year. the fiscal policy in germany contributes visibly to the stabilisation of the macroeconomy. automatic stabilisers play an important role in that regard. in a longer - term perspective one lessons from the current crisis and its causes is that monetary policy should treat financial cycles in a more symmetric way. this means taking account of the financial cycle in the upswing as well as in the downturn. in an operational sense it means enhancing the time horizon for monetary policy and paying paying close attention to money and credit aggregates.