easing in monetary conditions in the euro area – as manifest for instance in a downward shift in term money market interest rates and other important market interest rates. moreover, our forward guidance continued to effectively support our policy intentions : first, it has mitigated the sensitivity of the money market term structure to surprises from economic data releases ; and second it has reduced market uncertainty about the path of future short term rates. but notwithstanding this favourable track record of our recent policy measures, we should remain alert to any contingencies that may give rise to downside risks to price stability. in particular, we are closely monitoring money market conditions and their potential impact on our monetary policy stance. by extending the horizon of the fixed rate full allotment mode at least until mid - 2015 we have provided additional funding reassurance that will support the transmission of monetary policy signals through the banking system. the number for loans to households and non - financial corporations are adjusted for loan sales and securitisation. bis central bankers ’ speeches at the same time, we stand ready to adopt additional measures if we were to observe developments in money market conditions that threaten to interfere with our policy intentions. moreover, the subdued inflation outlook provides little safety margin against further adverse shocks that may give rise to downside risks to price stability. that safety margin is reflected in our focal point of inflation rates just below 2 % in the context of our price stability. it ensures that steady state inflation provides for a sufficient buffer away from zero. with an inflation outlook below this focal point, our reaction time for additional accommodative policy action shortens accordingly. in this regard, the debate among observers has focused on the question, which measures the ecb were to take under these circumstances. as explained – and demonstrated – in the past, the ecb is in a position to adopt a wide range of instruments to ensure price stability, in line with the extensive instrument independence it has been granted under the treaties. this allows us to tailor our policy response to the specific contingencies that the euro area may face at a given point in time. we will continuously evaluate our policy options and we will act if the circumstances so warrant and adopt measures that are most effective in confronting the challenges at hand. but we need to be also wary of the limitations of further measures. let ’ s not forget that our monetary policy stance is already accommodative and financing conditions are favourable overall. indeed, we see sluggish demand for credit despite low

s s mundra : unintended consequences of new international supervisory framework – an emerging market perspective keynote address by mr s s mundra, deputy governor of the reserve bank of india, at the bank of france - reserve bank of india joint conference, paris, 20 july 2015. * * * assistance provided by dr. mridul saggar, shri ayyappan nair and shri sanjeev prakash is gratefully acknowledged. bonjour! 1. thank you ms. anne le lorier for your thoughts. it is my pleasure to deliver the key note address at this rbi - bdf joint conference being hosted by banque de france. let me begin by thanking you and the bdf for your warmth, friendliness and cordiality. banque de france is one of the oldest central banks in the world, set up in january 1800 by napoleon bonaparte with the objective of fostering renewed economic growth in the wake of the deep recession of the revolutionary period. as we sit down to deliberate upon the consequences of new international supervisory framework today, the milieu is strikingly similar to what existed more than two centuries ago. even today, the global economy continues its struggle out of retrenchment in output suffered during the financial crisis, proving right the adage “ more the things change, more they remain the same ”. even as the standard setting bodies ( ssbs ) have embarked upon various regulatory reforms to nurture the financial system out of quagmire that it had gone into before the outbreak of the crisis, we feel it is worthwhile to deliberate upon the unintended consequences of the new international regulatory / supervisory measures and chart out ways to counter the potential adverse fallouts. in my address today, i would like to present the views from the perspective of the emerging markets. i will begin by briefly tracing the genesis and context of the new supervisory framework and then, i will argue that there are limitations around how much can the regulatory regime be tightened, considering its cost on the economy. i would then close by offering my perspectives on the way ahead for limiting the unintended consequences of the new regulatory framework. but before i get to the subject proper, let me spend a couple of minutes in underlining the contrasting realties that the advanced and the emerging economies like india are faced with, in an otherwise “ interconnected ” world. 2. let us face it – it ’ s a multi - paced world. the ground realties in advanced economies (