in the long term and price stability is the essential responsibility of the monetary authorities. the task is complicated by interaction with the other factors – for example, by the impact of global resource constraints or the growing concerns about climate change – but monetary policy stays firmly focused on delivering price stability, which is important for the efficient working of the market system and the optimal allocation of resources. by maintaining price stability over the medium term, which means pinning down trend inflation and ensuring that inflation expectations are firmly anchored, central banks contribute to the smooth functioning of the economy, to sustainable growth and to job creation. the ecb with its mandate for price stability is firmly focused on this policy goal. as one dimension of the complexity of the present global economy is the financial market turbulences, let me elaborate a little bit on the actions taken by the ecb. at the eurosystem we made a clear distinction between setting the monetary policy stance to maintain price stability over the medium term and its liquidity decisions taken in the course of implementing this stance. this distinction serves to isolate signals of the monetary policy stance from the noise introduced by liquidity movements and volatility in very short term rates. since the onset of financial tensions in august 2007, the actions of the ecb have fully respected this principle. in both “ normal ” and “ turbulent ” times, the primary objective of eurosystem ’ s open market operations is to keep the overnight rate as close as possible to the minimum bid rate. however, during the recent period of turbulence open market operations aimed also at ensuring the continued access of solvent banks to liquidity notably by contributing to smoothening the impaired functioning of the money market. from the very first day of the financial market turmoil, in an environment of increased liquidity risk and in response to banks ’ changed liquidity demand pattern, the ecb has achieved these objectives through relatively minor, technical changes to the way in which it supplies liquidity in normal times, while at the same time utilizing the latitude given by its framework for monetary policy implementation. first, the eurosystem has adjusted the distribution of liquidity supplied over the course of the maintenance period, by frontloading the supply of liquidity at the beginning of the period and reducing it later, so that the total amount of liquidity over an entire maintenance period is unchanged. second, during the turmoil the eurosystem has applied different open market procedures for supplying liquidity to the banking system. more specifically, 1. the use of fine - tuning operations

has been more frequent than in “ normal times ” because of the unpredictability of the liquidity demand. 2. the amount of refinancing provided via longer - term refinancing operations ( ltros ) has been increased significantly with a view to smooth conditions in the term money market. the amount of refinancing provided via the one - week main refinancing operations ( mros ) was reduced correspondingly, so that the total amount of outstanding refinancing has remained unchanged. as a result, the average level of eonia has remained close to the minimum bid rate even if its volatility has at times been higher than normal and our assessment is that our operations have had a positive impact – in particular in diminishing volatility – on term money market conditions. the eurosystem did not have to change its collateral framework at the time of the financial turbulences because, since its inception, it accepted relatively broad ranges of collateral and it granted a large number of counterparties access to rather large refinancing operations. we consider that the operational framework of the eurosystem has in itself provided notable stability during the turmoil. it is important to recall that, as the turmoil went on, central banks strengthened their cooperation, first through enhanced information exchange and collective monitoring of market developments and later on by coordinated steps to provide liquidity. since december 2007, the ecb has, in cooperation with the us federal reserve and together with the swiss national bank, been conducting several term auction facilities – so - called taf - operations – in which it provides usd liquidity, on behalf of the us fed, to euro area banks. these liquidity - providing operations do not have a direct effect on euro liquidity conditions, but are conducted to address the availability of us dollar funding for euro area banks and aimed at improving global funding conditions. i would sum up by noting again the challenging environment within which economic policymakers are currently operating. the global economy is undergoing a range of interdependent shocks across various facets of the global system. in part, they are associated with a change in our operating environment in which resources constraints are more pertinent ; technological progress is accelerating ; and interactions are more complex. understanding the shocks and their interrelations in this system is vital and ongoing part of our economic analysis and decision - making. thank you for your attention.