s policy rate – that has the ultimate impact on household consumption or firm investment decisions. increasing real interest rates thus indicated that further monetary easing was necessary despite the policy rates being close to the zero lower bound. [ slide 7 : eurosystem ’ s accommodative monetary policy ] in the june 2014 monetary policy meeting, the governing council eased the stance of monetary policy. as a part of the package, we cut the deposit rate to negative, extended the guarantee of banks ’ access to unlimited central bank finance ( given that they provide sufficient bis central bankers ’ speeches collateral ) by extending fixed rate full allotment policy, and we set up a series of additional long - term refinancing operations that provide the banks with finance on the condition that they increase the value of their loans to the real economy. the current cycle of monetary policy easing started in october 2014 when we introduced two private sector asset purchase programmes : the asset backed securities purchase programme and the third programme for covered bonds. in january 2015 the governing council judged that additional monetary policy easing was needed as the inflation outlook weakened further. the eurosystem extended its purchases to bonds issued by euro area governments, government agencies and european institutions. [ slide 8 : ii – key features of eapp ] let us now discuss the current, expanded asset purchase programme, in more detail. [ slide 9 : the eurosystem sets the liquidity of the euro area banking system ] the eurosystem is able to regulate the euro area banking system ’ s liquidity with two tools. firstly, the eurosystem organises regular refinancing operations : tenders. the interest rate applied to these operations is the main policy rate, which currently stands at 0. 05 %. with these refinancing operations the eurosystem steers short - term money market rates. the tender operations are demand driven : banks can decide whether or not to participate. in contrast, outright asset purchases are not demand driven. by asset purchases the central bank actively steers liquidity of the banking sector by bond purchases. participants of regular tender operations consist of monetary policy counterparties, mainly banks. outright purchases reach directly a much broader set of financial institutions, some of which are not even located within the euro area. as instruments bought by the eurosystem may have maturity of up to 30 years, with these purchases the eurosystem is able to steer longer term interest rates. [ slide 10 : eapp consists of two parts ] the euros

economic benefits, including more efficient resource allocation, along with welfare gains from deepening specialisation, cheaper products, and greater product choice. but as the economic and financial effects of a changing global landscape are multifaceted, they imply several policy challenges at both the domestic and international level. i do not intend to address all of these policy challenges today, rather, i would like to focus on two specific challenges : the implications of globalisation for inflation and monetary policy, and the governance of globalisation at the international level. see imf ( 2007 ), “ the globalization of labor ” ( world economic outlook, april ). source : imf balance of payments statistics. globalisation and its implications for inflation and monetary policy the aspects of globalisation i have been describing thus far entail many important macroeconomic consequences for the euro area as well as other global regions. 3 perhaps most crucial from a central banking perspective is the impact on consumer price inflation. while several ways of classifying the impact are possible, i think that a simple taxonomy of globalisation ’ s influence on inflation into two main channels – direct and indirect – provides a useful one in characterising the effects on inflation. first, globalisation has strong direct effects on price movements of certain goods and services, and in this sense can be thought of as a shock exerting a strong influence on relative price dynamics. on the one hand, increasing trade openness seems to have had a downward impact on manufacturing price developments over the last decade or so. in the euro area, rising imports from lower - cost countries, mainly from china and the new eu member states, appear to have put downward pressure by an average of approximately 2 percentage points per year on extra - euro area manufacturing import prices over the period 1995 - 2004. 4 on the other hand, globalisation and its implications for global demand, has implied strong increases in other prices. here, i am thinking of the upward pressure from commodity prices that derived from strong growth of commodity imports by emerging markets – both concerning energy and, more recently, food. these price rises have been impressive to say the least. since 2002, the price of brent oil has risen more than five - fold in us dollar terms, while the price of non - ferrous metals has risen more than three - fold. since the beginning of 2006, such large price increases have also extended to food – with at least a doubling in the price of wheat, maize and soybeans. while i would not claim