require extraordinary monetary policy 2 / 5 bis central bankers'speeches support. we maintained our policy rate at its effective lower bound of 25 basis points, and we remain committed to holding it there until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. in the bank ’ s july projection, this happens in the second half of 2022. the bank ’ s qe program continues to reinforce our forward guidance and keep interest rates low across the yield curve. yesterday, we maintained our qe purchases at a target pace of $ 2 billion per week. decisions regarding future adjustments to the pace of net bond purchases will be guided by governing council ’ s ongoing assessment of the strength and durability of the recovery. the reinvestment phase this brings me to the second part of my remarks today — our qe program and monetary policy for the recovery. the economic recovery we have experienced to date has allowed us to gradually reduce the pace of qe purchases from at least $ 5 billion a week to a target of $ 2 billion a week. at that pace, we are still adding stimulus — but at a slower rate. when we get to the reinvestment phase, we will adjust the level of our bond purchases to maintain the bank ’ s total holdings of government of canada bonds roughly stable. and when we arrive at the reinvestment phase, we will communicate this monetary policy decision clearly. last march, my colleague, deputy governor toni gravelle, outlined a few important things about the transition to the reinvestment phase. first, the process will be gradual and will proceed in measured steps. second, the timing of changes to the pace of purchases will be guided by our evolving assessment of the outlook as well as the strength and durability of the recovery. third, adjusting the pace of bond purchases won ’ t necessarily mean that we have changed our views about when we need to start raising the policy interest rate. these decisions are distinct. we have tied interest rate decisions to our forward commitment to not raise the policy rate until slack is absorbed so that we sustainably achieve our inflation target. eventually, when we need to reduce the amount of monetary stimulus, you can expect us to begin by raising our policy interest rate. what this all means is it is reasonable to expect that when we reach the reinvestment phase, we will remain there for a period of time, at least until we raise the policy interest rate. but again, let me emphasize, when we get

erosion of the single market. their central concern is that new member states should not only incorporate all 90, 000 pages of the acquis communautaire in their national legislation, but actually implement them. [ as a matter of fact, the european union is already paying the necessary attention to transition - and catch - up - related policy challenges in the financial and economic field. both the european council of ministers of finance and the eurosystem have entered into active consultations with the accession countries to discuss diverse issues such as the monetary policy strategy, financial stability and fiscal policy. during these consultations, the eu addresses not just the challenges inherent in joining the union, but also the manner in which successful convergence can be continued after accession. ] a major element in this surveillance is exchange rate poliy. sooner or later the new member states will take part in the european exchange rate mechanism, erm ii. the treaty provides for a minimum participation period of two years before changeover to the euro can be considered. it cannot be sufficiently stressed that apart from this requirement, participation in the mechanism can offer the necessary stability and flexibility for a successful convergence process. the erm offers stability in the form of a central parity anchor against the euro, and flexibility in the shape of ample fluctuation margins and the option of central parity adjustments. participation in erm ii should therefore not be perceived as an obligatory hurdle on the road to the euro, as some policymakers in central and eastern europe unfortunately do. [ actually, the financial and economic dialogue with the accession countries could be incorporated into the regular process of european policy coordination and surveillance, with special emphasis on the monitoring of transition periods, specific challenges to policy and administrative capacity. changeover to the euro will eventually follow, when a sufficient degree of structural convergence can guarantee the desired price stability in an environment marked by an irrevocably fixed exchange rate and a centralised monetary policy. ] conclusion having set out the specific policy challenges facing the accession countries consequent on accession, transition and convergence, i am coming to the end of this address. obviously these challenges will continue to present themselves in some way or another to newly joined member states. in this context, i warned against premature changeover to the euro. the surrender of exchange rate flexibility and the euro area - wide orientation of monetary policy may not be compatible with the challenges posed by structural and real convergence. it is important that these challenges ( continue to ) be explicitly acknowledged in