however, overcoming the challenges posed by excessively high inflation requires the contribution of other players as well. fiscal policy has a major role to play in protecting the most vulnerable income groups from excessive inflation, but has to act in a manner that does not amplify current inflationary pressures. targeted and temporary fiscal measures cushion the energy shock, without persistent implications for aggregate demand. in addition, the deterioration of the macroeconomic situation alongside the uncertainty surrounding the outlook for inflation and interest rates pose risks to financial stability. the ecb needs to be alert to any emergence of fragmentation across euro area financial markets, which could compromise the timely return of inflation to its target. such phenomena could lead to a tightening in financial conditions over and above the extent warranted to contain inflation. at the same time, an abrupt tightening in monetary policy may lead to sharp increases in sovereign bond yields and a widening of spreads of the vulnerable sovereigns, with severe consequences for financial stability. the above illustrate the complicated situation which the governing council has to face. the importance of swift action to control inflation as soon as possible cannot be stressed enough ; still, the tightening pace should be well - adjusted, in order to avoid amplifying economic slowdown and posing a threat to financial stability. this is a very narrow path to tread that demands careful navigation. in the present environment, monetary policy needs to remain an anchor of stability and confidence that inflation will return to its target in a timely manner. in navigating this path, it is important to maintain prudence and gradualism. as former ecb president mario draghi3 has said, " in a dark room you move with tiny steps. you don't run, but you do move. " with these words, let me wish you a very productive and fruitful conference. thank you for your attention. 1 in the absence of the monetary policy measures, gdp would have been at least 2. 7 % lower by end - 2018, and annual inflation 1. 3 % weaker. see rostagno, m., altavilla, c., carboni, g., lemke, w., motto, r., saint - guilhem, a. and yiangou, j., " a tale of two decades : the ecb's monetary policy at 20 ", ecb occasional paper no 2346, december 2019. 2 see keynote speech by fabio panetta, member of the executive board of the ecb, at the

financial safety net will need to be put in place to assure that greece is able to weather adverse developments that could temporarily drive borrowing costs up to unsustainable levels. the envisaged “ cash buffer ” is one such safety net, that would enable greece to avoid a recourse to the markets at times of heightened volatility and high refinancing costs. this cash buffer is currently being built up with the trial bond issues before the end of the programme, as 1 / 7 bis central bankers'speeches well as with disbursements from the european stability mechanism ( esm ). at the current stage, the first trial return to the markets took place in july 2017 with a five - year bond issue, while in november 2017 a bond exchange was conducted for an amount of €25. 8 billion. subsequently, after the completion of the third review, a seven - year bond issue was launched, as part of the government ’ s plan for greece ’ s return to international markets before the end of the programme. this issue, which took place amid turbulence in international financial markets, was successful. however, episodes of turmoil such as the recent ones appear to have a greater impact on countries with poor credit ratings and a weaker economy. these countries saw the yields on their government bonds rise considerably. this suggests that, in the present uncertain conditions, the greek state ’ s return to the markets, as necessary as it may be for a return to normality, must proceed with caution. international experience has shown that trial bond issues for the purpose of creating a sound cash buffer prior to the expiry of a programme helps bolster confidence and paves the way to the exit from the programme. nevertheless, the need for a complementary precautionary assistance programme must also be considered. the possibility of a recourse to a precautionary support programme, especially if financial market conditions call for one, must not be overdramatised, as the european mechanisms are there to be used if needed. such a precautionary assistance framework can be expected to support the greek economy, by helping to reduce borrowing costs, since it will provide assurance of the greek government ’ s and banks ’ access to funding beyond the end of the current programme in august 2018. under an esm precautionary credit line, funds would become available, without necessarily having to be raised beforehand, whereas the build - up of a cash buffer necessarily entails additional borrowing, which would increase