of monetary policy leeway to deal with the next global downturn. the possible existence of a lower bound for monetary policy rates could challenge central banks if they want to stimulate the economy through conventional policy instruments. the question is whether unconventional monetary policy instruments, such as asset purchases and targeted lending, will become conventional during the next downturn. on 12 september the ecb decided on a stimulative package that points in this direction. the leading policy rate was lowered and net purchases under the asset purchase program were restarted. unconventional monetary policy measures also impact economic developments in denmark, given the danish fixed exchange rate policy. let me remind you : denmark is in reality a euro member state, but with costs of currency exchanges and without influence on monetary policy decisions by the ecb. on september 12 the danmarks nationalbank lowered the key policy rate in line with the ecb. ( graph 7 – synchronised nordic monetary cycles ). while danmarks nationalbank meets its objective of ensuring stable prices in denmark via the fixed exchange rate policy, many other central banks use interest rates to target inflation directly. although the nordic countries have implemented different monetary policy regimes, economic implications are in reality quite similar. the reason might be that interest rates across economies are heavily influenced by the global financial cycle at the centre is the federal reserve. there is a high degree of spill - overs between financial markets in different countries. therefore, a change in financial conditions in a large economy like the us quickly transmits to conditions in other financially open economies. it is thus impossible for the nordic countries to insulate their monetary policy from the central banks in large countries, unless capital flows are controlled. financial interdependence reduces the ability of monetary policy to target domestic economic conditions independently. page 3 of 6 the high degree of synchronisation of monetary policy rates in the nordic countries supports this line of thinking. we occasionally face short - term costs of procyclical interest rate changes, as seen in the wake of the financial crisis. however, these periods occur very rarely and often last for a very short time. several studies find that danish monetary policy, in general, works countercyclically, as the business cycle in denmark is highly synchronised with the business cycle in the euro area. most importantly, the monetary regime should be credible. in general, evidence shows that the choice of monetary policy regime might not be that important for stabilisation of the business cycle. monetary policy makers are not

a satisfactory financial condition. thanks to the new model to migrate to, the processes of bank resolution are sure to become less inexpensive, faster, more manageable and overall more effective. we will see banks under resolution being reorganised so as to ensure that financial recovery yields maximum results and raises investment appeal of such banks. concurrently, this will predetermine optimisation of the banking sector ’ s structure. both commercial banks and private investors would be able to enjoy the outcomes as they acquire well performing banks and those with capital top - up. apparently, the mechanism will be the subject for discussion with the bank community. looking forward, i would like to tell you that we have looked into potential risks this approach involves. here are our key findings. the risk of banking sector becoming nationalised. in our understanding, we are running no such risk, for two reasons. first of all, because of the minor role of the banks under resolution in the total banking sector. the 28 banks that became subject to resolution accounted for a mere 4 per cent of the banking sector ’ s liabilities. and we do not expect their importance to become any stronger. further, as i have noted, resolution should result in the sale of banks in the market ; therefore, we expect there to be no significant impact from the new approach on the correlation of public to private participation in bank capital. further on, on conflict of interests, that is, the risk that the quality of supervision over banks reorganised by the bank of russia - controlled institution may deteriorate. with a view to avoiding this risk, we intent to construct a ‘ chinese wall ’ to separate bank of russia supervision activities from the fund ’ s management company. we would draw on our experience with such ‘ chinese walls ’, for example, the one between monetary policy and supervision – a fully working arrangement. but, most importantly, the banks under resolution in the new model – once their capital is restored – would be obliged to comply with all regulations, and they should expect no easier ride. in such a way, we would get unprivileged supervision, that is, the one that grants no special status - related discounts to banks under resolution. let me now pass on to regulation, where we plan to implement a number of meaningful initiatives. as you know, our efforts to implement basel standards are ongoing. this year, for the first time ever, we have passed the basel committee test that recognised russian legislation as fully