earned see for instance f. mishkin, “ not all bubbles present a risk to the recovery ”, financial times, 9 november 2009. by euro area large and complex banking groups in the second quarter of 2009. this was the highest level seen in the past five years. the increase in revenues from the core banking business and the considerable cost - cutting have nevertheless boosted profitability this year. income from trading has recovered strongly in this period, also improving banks ’ performance. the restored profitability has recently enabled some european banks to start repaying the capital injections provided by governments, suggesting greater robustness in the system. however, the trend worsening of non - performing loans should not be considered over yet – it might turn out to be worse than projected. banks shouldn ’ t assume that it ’ s time to go back to previous practices, using their profits primarily to remunerate staff and reward shareholders. they need first of all to give priority to further improving their capital position, as a buffer against worst - case scenarios. supervisory authorities should keep an eye on banks for this reason. banks need also to plan for more stable and sustainable long - term sources of financing. it ’ s interesting to note that non - financial corporations have successfully made large bond issues, while monetary financial institutions have been much more timid, compared with their precrisis levels ( see chart 4 ). since mid - 2008, the annual growth rate of debt securities issued by monetary financial institutions roughly halved to around 4 % in september. by contrast, the growth rate of debt securities issued by non - financial corporations increased over the same period from around 3 % to 15 %. the support mechanisms provided by governments have not been fully utilised, in particular with respect to guarantees ( see chart 5 ). in any case, the situation remains imbalanced. some banks are still very reliant on unlimited central bank financing. these cases have to be addressed rapidly by the responsible national authorities. otherwise they will create a burden on the other banks, by overbidding for and hoarding liquidity. the exit strategy let me turn to the exit strategy. this is an issue on which many have spoken recently. i won ’ t repeat the arguments which have already been expounded very clearly. the exit strategy has two dimensions. one concerns the non - standard measures which have been implemented to improve the functioning of the transmission mechanism. the other relates to the stance of monetary policy, which can be calib

are very different expectations in the market. some say the ecb has now “ finished ” or, at least, that the barrier to further loosening is very high. others say that further measures are only a matter of time. who is right? it is too early to speculate about further steps. i would prefer it if our monetary policy did not have to change again in the foreseeable future. however, we are, of course, always dependent on the data. the decisive thing for us is the inflation outlook. over 15 years we have achieved an inflation rate of 1. 9 % on average – i. e. below, but close to, 2 %. we have kept the euro safe. we have delivered and we will continue to deliver. we have the tools that could help us reach our goal, and, if it becomes necessary, we will use them. if the projections of ecb economists for 2018, which will become available in march 2016, show inflation persistently falling short of almost 2 %, would that be a trigger for further support? the deviation of inflation expectations from our medium - term target is what counts for us. how concerned are you about the risk of deflation? i have always said that i do not believe that the euro area as a whole could slide into deflation. but as i said, even inflation that is positive but too low poses significant risks. it weighs on inflation expectations if it persists, which then has an impact on wage and price decisions. that can make it even more difficult to reach our target. we have to be very vigilant about secondround effects. should the ecb ’ s governing council believe that further measures are necessary, what would be the preferred instruments? for example, why has it now considered it more effective to extend the asset purchase programme ( quantitative easing ( qe ) ) until march 2017 instead of increasing the monthly purchases of around eur 60 billion? letting the programme end in september 2016 would probably not have been enough to bring inflation to where we want it to be by the end of 2017. that is why we extended our programme – so that it has longer to take effect. so there is more of a tendency to extend the programme? the extension is what we considered appropriate and decided to do. bis central bankers ’ speeches the governing council also further lowered the interest rate for its deposit facility to – 0. 3 %. when will negative interest rates become a risk to financial stability? i