inflation observed in the euro area is affecting all advanced economies. what is behind this? there is no simple answer to this question. several factors are at play. let ’ s start with the difficult situation observed on the labour markets in most industrialised countries. the unemployment rate remains very high in the euro area. if this figure is lower for the united states, it is because many americans have withdrawn from the labour market. to this must be added the deleveraging by households and businesses, which is weighing on consumption and investment, and other factors, such as the slowing of china ’ s economy, which is having a dampening effect on energy commodity and food prices, as well as the decline in energy prices, which is linked in part to the exploitation of shale gas in the united states. we need to know whether these developments are sustainable. all the major central banks, and not just the ecb, are asking themselves this question. bis central bankers ’ speeches what could the ecb do to influence the level of the euro? we have several instruments at our disposal in the event that it becomes necessary to loosen our monetary policy stance. we still have some margin to reduce key interest rates, including by pushing the deposit rate into negative territory ( which remunerates the banks for funds held in the ecb ’ s overnight deposit facility ). finally, at its last meeting, the governing council declared itself unanimously ready to look into non - standard measures, including the possibility of quantitative easing ( qe ) if circumstances dictated. would such quantitative easing affect purchases of government or private debt? if implemented, this instrument is expected to have an impact on a range of assets that is broad enough to inject sufficient liquidity into the economy. the ecb ’ s choice as to whether it should then repurchase public or private assets would depend on three factors. first, it is a question of effectiveness, in order to ensure the smooth transmission of the measures taken to the real economy, and in particular loans to businesses. second, it is an issue of feasibility. the financial markets in europe are very different to those in the united states : a qe for the euro area would thus be very unlike the us version of qe. lastly, purchases of assets should be carried out in line with the treaty, which prohibits the ecb from directly financing governments. discussions are underway on all of these aspects. i should add that any monetary measure will only be effective if banks in the euro area are

absence of european unification. the impact of the single market on the prosperity of european states, however, has been considerable. it is estimated that european economic integration has boosted annual economic output by between 5 and 25 per cent. 1 2 3 that ’ s a handsome 1, 450 to 7, 250 euro per capita. there is no question that economic and monetary union was the boldest step towards deeper economic integration. and at the same time, it was a twin promise : of price stability, and of stronger long - term economic growth. there is a broad consensus that emu has so far succeeded in delivering on the first of those promises. i dare say that significantly fewer people would claim that it has done likewise on the second. for one thing, mounting economic competition across borders has been driving change, just like technological progress has, and many people are afraid of this. if the benefits not just of economic integration but of innovation as well are to be felt by the greatest number of people, the framework conditions also need to be right. flexible economic structures and a good education system, say, are prerequisites for sustainable growth and for ensuring that many people can share in the opportunities offered by technological progress and international trade, for example. for another thing, though, the financial and sovereign debt crisis shook the euro area to its core. taxpayers were forced to step in for billions upon billions of euro in bank losses. joblessness in some member states rocketed to levels hitherto unseen in the post - war era. to all intents and purposes, european and global institutions became the ancillary government in individual countries. and many saw the rescue packages as the first step on the road towards a transfer union – something which had been categorically ruled out prior to the launch of monetary union. many perceived the problems instigated by the crisis to be huge. some even thought them irresolvable. indeed, a number of commentators, particularly on the other side of the atlantic, but elsewhere, too, predicted that the euro would come crashing down. that didn ’ t happen – and it would have been a disaster if it had. at the same time, let ’ s be honest 2 / 9 bis central bankers'speeches – the future might also hold regional or sectoral crises in store which put the euro area to the test. the upbeat economic situation right now shouldn ’ t blind us to the fact that it is one outcome of a very accommodative monetary policy