financial system is thus key to reducing the risk of returning to the pre - crisis problems. the question to ask advanced economies is : can the measures taken in the last few months minimise the risk of a relapse? substantive work has been done in recent months ; it has been witnessed by the emerging markets which now belong to fora such as the g20 and the financial stability board. however, progress at high level is one thing. the hard work of implementation – the devil in the details – is another. experience has shown that internationally agreed standards, such as basel ii, are not always uniformly implemented in all the signatory countries. furthermore, pressure from the financial industry to minimise regulatory changes in advanced economies is mounting by the day. that pressure is fuelled by the renewed profitability of market participants, who are benefiting from the very favourable financing conditions. if i may develop that now famous music - and - dancing metaphor used by a banker just before the crisis, financial markets are now giving the impression that the music is back on and that many dancers are up on their feet again. what ’ s more, regulators and supervisors do not seem to have found a way yet to slow the music down. seen from a distance by net creditors and users of the advanced world ’ s financial infrastructure, a lack of progress in implementing the agreed agenda is an incentive to continue with a strategy of self - insurance, and thus to delay the exit. let me conclude. an optimal exit strategy from the extraordinary monetary, fiscal and financial policies implemented by advanced and emerging market economies has several elements. it has to be timed properly, in all countries. this is difficult : not all countries are in the same cyclical position, so some should exit earlier than others. however, those who should exit earlier can do so if they are confident that those who are supposed to exit later will do so in the same timely fashion. furthermore, they want to be sure that the worst of the crisis is over and that concrete actions are being taken to overhaul the financial system. to make such commitments credible and to build up that confidence, we need a stronger system of international cooperation than the current one, with the major countries undertaking to bear in mind the external implications of their actions. without a stronger multilateral system we might end up repeating the mistakes of the past, with one difference. the impact on each of us will be greater. thank you for your attention.

. involuntary part - time and temporary work – which has to be absorbed again before wage pressures increase. in practice, we are seeing positive signs : in fact, the difference between the overall unemployment rate and broader measures of slack on the labour market has declined somewhat over the past two years. the proportion of enterprises in manufacturing and services which say that labour shortages are limiting their output has never been so high. the result is stronger wage growth, which is contributing to an increase in inflation. several measures of underlying inflation have apparently passed the turning point. i say the word “ apparently ” as monetary policymakers should be cautious in their judgements1. the estimates of slack in the economy differ widely and are often corrected. model results, as complex as they may be, should be treated with the requisite caution. in the end, assessments based on experience continue to be an essential part of monetary policy decision - making. monetary policy decisions should therefore not only be based on model results, but should also take into account the balance of risks. there are times when lack of action is much more dangerous than taking action and when resolute action is the most reasonable thing to do. for example, our purchase programme was necessary to avert the risk of deflation. however, there are also times when the balance of risks changes fundamentally and thus monetary policymakers should act more carefully. future challenges facing monetary policy so now let ’ s turn our attention to the future. i believe that the conditions for gradually ending the asset purchase programme are in place. however, it is up to the ecb ’ s governing council to decide on the exact timing of such a move. i ’ m not going to talk about the possible timing today. let me instead touch on some of the risks we will face in implementing our monetary policy over the coming years. these risks are likely to grow the longer our asset purchase programme continues. the first risk relates to the subsiding deflationary headwinds i have already mentioned. could it be that our monetary policy is suddenly too expansive? in short, because of the uncertainties and imprecisions involved in measuring slack and inflationary pressure, we might find ourselves behind the curve without realising it. as a result of the long and variable lags of monetary policy, we could end up with inflation above the rate consistent with our mandate. this would require a sharp correction of our monetary policy stance in years to come. yet such a correction of interest rates would pose risks to