implied by an overly prolonged period of low inflation. 1 / 5 bis central bankers'speeches today, ten years after the financial crisis escalated, policy rates are still at historic lows. the eurosystem has accumulated a huge portfolio of securities of various kinds, and refinancing operations offered to banks have remained more than generous. as a result, excess liquidity stands at a level nine times higher than after the lehman collapse, and monetary policy is roughly as expansionary as it was when the crisis was raging. put differently, the remaining policy space is rather limited. 3 where are we going? given where we are now, a well - known joke comes to mind : a tourist in a big city asks one of the locals for directions to the train station. the local replies, “ well sir, if i were you, i wouldn ’ t start from here ”. but where are we going? or to be more precise, where should we be going? to some observers, our destination, the “ new normal ”, should not look that different from the status quo. among other things, they argue that non - standard measures such as large - scale asset purchases proved their worth during the crisis. therefore, they should remain in the monetary policy toolbox and be applied under normal conditions as well. 3. 1 guiding principles ladies and gentlemen, the scottish philosopher david hume postulated that we cannot derive the “ ought ” from the “ is ”, the so - called hume ’ s law. admittedly, we all know that “ the normative force of the factual ” can be strong. but this force arises from a general acceptance of the current state. instead of pre - determining details of the new normal or ruling out potentially relevant alternatives based on the status quo, we need to resort to guiding principles which are well - established and generally agreed upon. admittedly, acting in accordance with a principle should not be viewed as an end in itself. but at a time when many european citizens seem to be falling prey to scepticism about the historical project of european integration, i would like to highlight the positive and optimistic guidance that is laid out in the european treaties. the european union aims at promoting the well - being of its citizens, ensuring economic and social progress, and improving the living and working conditions of our peoples. to achieve these broader aims, the treaties provide guidance for policymakers by setting objectives and principles such as price stability, sound public finances, and market orientation. in

of the post - crisis reforms that will soon be completed. taking this compromise as a starting point, we now have to look to the future – for it is well known that the challenges for the banking sector are considerable. with regard to regulations, we must not give in to those who want to turn back the regulatory clock. but nor we must not go on tightening the screws of regulation ever further. i am therefore in favour of a regulatory break after the reforms have been completed. this should be used to thoroughly evaluate the impact of the reforms and to amend and improve them where gaps and errors are found. this does not include the few outstanding areas where action is called for, such as the regulatory treatment of government bonds. 4. paper never refused ink : reforms will be short - lived without a change in attitude ladies and gentlemen, as you can tell, i am a realist. and that brings me to the third point i would like to make – that even the best reforms will only go so far if they are not accompanied by a permanent change in attitude. because without that change, the rules will be monitored less rigorously than intended. even before the diesel scandal broke, we knew that even the best rules don ’ t achieve much if nobody is made to keep them. ideally, the change in attitude in the financial sector should be based around an understanding that consistently monitoring and complying with the rules is in everyone ’ s interests. all too often, decision - makers think that they are doing the economy a favour by saving a bank from insolvency or calling for prudential leniency in order to prolong a riskier type of activity. their intention, one would imagine, is to safeguard stability and jobs – but unfortunately, it has often turned out to be an unrealistic one. instead, all that such leniency has done is make two things more likely in the medium term : financial market bubbles and economic stagnation. 4 / 6 bis central bankers'speeches that ’ s because the financial crisis was the outcome not just of a handful of undisciplined banks or gaps in the rules but also of the belief that light - touch interpretation and monitoring of the rules was promoting economic activity. as you can see, political beliefs influence how rules are applied – and there is now even clear, international evidence to confirm this view. 2 and yet some people keep slipping back into the old ways of thinking. the debate about deregulation in the