range is an for an illustration, see figure 2. 13 in fahr, motto, rostagno, tristani and smets ( 2011 ), “ a monetary policy strategy in good and bad times : lessons from the recent past ”, ecb working paper n° 1336. bis central bankers ’ speeches important pre - condition. indeed, the governing council ’ s specification of the ecb ’ s primary objective has two characteristic features, which complement its monetary pillar. first, it is a range of values, not a point target. second, it is based on a medium - term orientation. this has two implications. first, there is some flexibility as to where inflation could be within the range at any point in time. in 2003 the governing council announced that within the range of inflation rates consistent with price stability, a rate “ close to 2 % ” should be the aim of policy in the medium term. but there is scope for inflation to vary within the range along the way to convergence with the medium - term policy aim, and many path configurations are possible. second, the medium term itself is not a pre - set time span, but it is dependent on the underlying shocks that may explain inflation dynamics from time to time. the former type of discretion – related to the path of convergence of inflation to its mediumterm level – is critical when supply shocks are positive, that is, expansionary and disinflationary. this dimension of the ecb ’ s monetary policy strategy is not always appreciated, but is important. when inflation pressures are absent or negative and positive shocks to aggregate supply feed financial buoyancy – the conditions which prevailed in the late 1990s and for a good part of the 2000s – having a range definition of price stability, rather than, say, a point target, is essential. the possibility of letting inflation temporarily drift down within its price stability range when faced with clear signs of financial exuberance increases the chances of hitting the inflation objective over the long run. the latter type of discretion – related to the time horizon – is crucial in the presence of transitory negative supply shocks and demand shocks. for example, a cost - push shock deriving from a spike in commodity prices pushes measured inflation upwards and is a drain on demand and economic activity. in the face of such a disturbance, the medium - term horizon affords some time for the shock to work its way through the economy and allows the ecb to “ look through ” it to a time when

the roadmap was deliberately designed to adopt a sequential approach, where urgent reforms and foundational issues are prioritized over an 18 - month time frame. these include increasing the volume and consistency of treasury issuances across the key benchmark posts, organizing the repo market for government securities, and enhancing the government securities eligible dealers ( gsed ) program to support secondary market liquidity, developing the yield curve, and strengthening the market oversight framework. moving the dialogue forward since august, we have been working closely with you to implement the outlined initiatives. following the endorsement by btr of the implementation of the government securities repo program and the grant by the securities and exchange commission ( sec ) of a provisional license to mart as a self - regulatory organization ( sro ), the monetary board approved last 1 / 3 bis central bankers'speeches november 23, 2017, the assignment of a zero - percent reserve requirement ( rr ) on the repo transactions under the program, issued through bsp circular no. 983. the zero - percent rr together with the exemption from dst minimize friction costs on repo transactions that conform to international best practices. during last august ’ s workshop, i remarked that a meaningful conversation is only as good as the actions and changes that follow it. today, we have a clearer understanding and fulfillment of our respective roles in the capital market reform agenda. reform agenda operationalized our capital market reform agenda officially unfolds with the inaugural repo trade under the government securities repo program. we also anticipate the announcement of the gsed market - makers later on. our roadmap is being operationalized! today ’ s inaugural launch of the organized repo market is a clear manifestation that we have, indeed, moved beyond conversations and plans, and have taken concrete actions to achieve our common objectives. the government securities repo program the government securities repo program is a key initiative under the local currency debt market development reform package. the bsp strongly believes that the establishment of an organized repo market is a key element in developing and deepening the domestic financial market. in particular, the organized interdealer repo market is expected to boost market liquidity and enhance price discovery as it gives gseds the ability to quote two - way prices. further, the “ deliver - out, true sale basis ” feature of this instrument is expected to provide market makers the ability to take positions and provide them greater flexibility in managing their portfolios. we recognize