monetary policy can act decisively to support demand, to stabilise inflation expectations and to avert second round effects on wages and prices, which is exactly what the ecb has done over the past two years. [ 2 ] but the orientation of other policies also influences the speed with which output returns to potential. so if other policies are not aligned with monetary policy, inflation risks returning to our objective at a slower pace. there are a number of policy areas that matter in this regard. first, for monetary policy to stoke demand and inflation, it matters crucially whether the financial system is able to relay our policy impulses efficiently to the economy. in the euro area that transmission mechanism has been impeded repeatedly in the past, initially by rising risk premia linked to unwarranted fears about the survival of the euro area, and later by widespread bank deleveraging. [ 3 ] that has diluted the effectiveness of our stimulus and lengthened the “ long and variable ” lags over which monetary policy works. we have compensated for this by designing our measures to remove transmission blockages, as well as including an asset quality review in the comprehensive assessment of bank balance bis central bankers ’ speeches sheets that we launched in 2013. both measures have helped ease financing conditions, as we can see in our bank lending surveys. but bank balance sheets have not yet been fully repaired, as illustrated by the high stock of non - performing loans in some parts of the euro area. so more work - out of these non - performing assets will have to take place, and the conditions for that will have to be put in place by the right policies and authorities. second, it matters for monetary policy whether fiscal policy is steering aggregate demand in the same direction, and how strongly. fiscal policy was contractionary for several years in the euro area following the loss of confidence in sovereign credit in 2010, and the negative effect on growth was exacerbated by the fact that consolidation in some countries was implemented mainly through tax rises rather than current spending cuts. this placed the full burden of macroeconomic stabilisation on monetary policy. and in a context of disrupted transmission, that has led to a slower return of output to potential than if fiscal policy had been more supportive. this is why the ecb has said many times that fiscal policy should work with not against monetary policy, and the aggregate fiscal stance in the euro area is now slightly expansionary. but supporting demand is not just a question of the budget balance,

explicitly requested not to do so ) and is being carefully considered. the governance of t2s is of special importance for us and thus an important element of our work programme. my colleague, mrs tumpel - gugerell and mr godeffroy, director - general payment systems and market infrastructure, have made presentations before the parliament this year to present the case for t2s and inform on the governance for t2s. the governance arrangements for the next phases of the project will be discussed in the coming months and the ep will be kept fully informed. i thank you very much for your attention.