. this would effectively tighten financial conditions not only by changing the expected path of short - term interest rates, but also by bringing forward the expected start of balance sheet normalization. to sum up, i see substantial advantages in behaving in as systematic fashion as possible in setting monetary policy. but that should be done in a way that fully accounts for any constraints on policy imposed by the economic environment, the presence of asymmetric risks, and allows us to learn as we go. the fact is that the economy is recovering after an unusually deep recession and a severe financial crisis. we don ’ t have much experience with this type of episode and how the economy is likely to perform. what we need to focus on is not what interest rate a given rule generates, but what policy setting can be expected to deliver the appropriate return path to the dual mandate objectives – the type of return path that standard taylor rule formulations achieved in different economic circumstances in the past. thank you very much for your kind attention. i would be happy to take a few questions. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches

as a whole. the ecb ’ s monetary policy response to these developments was twofold. first, to ensure that banks had access to longer - term funding, two three - year refinancing operations were undertaken at the end of 2011 and beginning of 2012. second, in the summer of 2012, the announcement of outright monetary transactions served as a powerful circuit breaker. however, by then, the sovereign debt crisis had already left a trail of destruction in its wake, paving the way for the third phase of the crisis. in the third phase, banks in many parts of the euro area started to deleverage, substantially reducing their lending to the private sector. towards the end of 2013 lending was falling by more than 2 % per year and another credit crunch was looming. by mid - 2014, the economic recovery was losing momentum and the weakness in aggregate demand was starting to depress inflation expectations. additional policy accommodation was needed to maintain price stability, but the rate on the ecb deposit facility had already been reduced to zero in july 2012. to address this challenge, the ecb sought to affect the whole range of interest rates that are relevant for private sector financing conditions through a strategy consisting of three elements. the first was the launch of a negative interest rate policy, which began with a cut in the deposit interest rate to – 0. 1 % in june 2014. this provided additional stimulus, as it extended the scope of conventional monetary policy. the second element was the introduction of a credit easing package, which included targeted longer - term refinancing operations designed to support bank lending to the private sector, a third covered bond purchase programme and an asset - backed securities purchase programme. these measures improved the pass - through of liquidity injected into the financial system to private sector borrowing costs. the third was the addition of a public sector purchase programme to the ecb ’ s asset purchase programme ( app ) to reinforce the accommodative monetary policy stance, further compressing term premia all along the yield curve. these instruments were complemented by the use of forward guidance, through which we started to communicate our expectations of future policy, along with the conditions that would warrant a change in the policy stance. forward guidance was intended to make our measures 2 / 4 bis central bankers'speeches as effective as possible, in particular by ensuring that the impact of asset purchases on term premia was not counteracted by false expectations of interest rate increases. over time, our measures have boosted the