had at the beginning of 2012, or should it become necessary to further address risks of a too prolonged a period of low inflation, it remains unanimous in its commitment to using additional unconventional instruments within its mandate. this would imply altering early next year the size, pace and composition of our measures. ecb staff and the relevant eurosystem committees have therefore stepped up the technical preparations for further measures with a view to implementing them in a timely manner, if needed. indeed, all of our monetary policy measures are geared towards underpinning the firm anchoring of medium to long - term inflation expectations, in line with our aim of achieving inflation rates below, but close to, 2 %, and contribute to a return of inflation rates towards that level. extending the policy response extending our outright asset purchases towards other asset classes could be one option if we were to judge that the economy was in need of further stimulus. it is important though to constantly keep in mind our intention, our purpose in adopting further measures. asset purchases are not an end in themselves. they are not a target of monetary policy. they are an instrument of policy. to see this, let us conduct a thought experiment : faced with the circumstances we have now, how would we have reacted in normal times – that is, with positive policy rates and no impairments in transmission? in my view we would have lowered rates further by now. this reaction would have been consistent with and guided by the wealth of evidence gathered over time on the transmission of changes in our key interest rates to borrowing rates and to economic activity and inflation. bis central bankers ’ speeches so, when we say our measures intend to bring our balance sheet back to levels seen in early 2012, what we are really saying is that – given the current composition of the unconventional monetary policies that we have put in place – this is the amount needed to bring inflation in the medium term back to levels closer to 2 %. and in a bank - based economy such as the euro area, pinning down this amount rests crucially on the effectiveness of our measures in reducing the borrowing costs of households and firms. it follows from this that an important criterion for the choice of additional measures – if needed – should be their degree of influence over broad financing conditions in the private economy, scaled up to an amount of easing judged sufficient to achieve our price stability mandate. this might give rise to a trade - off : some assets might ex ante be more effective than others in reducing private borrowing costs, but might

euro area, the governing council welcomes the reaffirmed commitments of the governments of euro area countries with fiscal imbalances to adhere to the objective of achieving balanced budgets by 2003 - 2004. the confirmation of the political will to continue along the path of fiscal consolidation is most appropriate. the governing council supports the actions taken by the european commission in the context of the stability and growth pact and the subsequent outcome of the ecofin council meeting last month. it is now necessary to remain vigilant in order to ensure strict adherence to the medium - term plans and rigorous implementation of the procedures of the stability and growth pact. in order to further improve the fundamentals of the euro area and to put the expected recovery on a broad and sustainable basis, euro area countries must strengthen their efforts to implement comprehensive structural reforms. over the past few years progress has been made with regard to enhancing the flexibility of euro area product and capital markets. euro area countries have also made some headway in terms of improving the way their labour markets operate. these reforms, together with moderate wage developments, have contributed to the strong employment growth and the considerable reduction in unemployment witnessed in many euro area countries in the last cyclical upswing. however, it is worth noting that despite the continued high unemployment in the euro area, firms continue to report difficulties in terms of recruiting suitably qualified workers. this suggests that further improvements in the functioning of euro area labour markets and their ability to match labour supply and demand are needed. evidence gathered in a recent eurosystem analysis, which will be published shortly, supports this view. in this context i would also like to stress that structural reforms in different markets should not be seen in isolation. the more efficiently euro area product and capital markets function, the greater the success of labour market reforms will be in creating employment opportunities. we are now at your disposal for questions.