years ahead. the latest ecb staff projections foresee average inflation at 0. 0 % in 2015, rising to 1. 5 % in 2016 and 1. 8 % in 2017. a key factor for a full recovery of the euro area economy and ensuring that inflation does not remain too low for too long will be the extra stimulus that the governing council decided to introduce in january under the ecb ’ s expanded asset purchase program. this decision was premised on two considerations. first, the momentum supporting the economic recovery was viewed as too weak and fragile to give us sufficient confidence that inflation would return to levels closer to 2 % over a policy relevant medium - term horizon. second, the expansive potential of the monetary policy measures that had been decided between june and october was seen as uncertain. this was because they were largely bis central bankers ’ speeches dependent on banks ’ own decision to borrow eurosystem funds and lend them on to their customers. the cumulative uptake under the first two targeted long - term refinancing operations stood at around €212. 4 billion. therefore, the monetary impulse had to be reinforced and needed to be quantitatively more predictable and controllable to put the economy and the outlook for price stability on a firmer footing. on 9 march, we started purchasing public - sector securities as part of our expanded asset purchase programme, which also comprises interventions in the abs and covered bond markets. overall, our asset purchases will amount to €60 billion per month. the pace of purchases so far puts the overall program on track to reach a total of €60 billion in march. at this point in time we see no signs that there will not be enough bonds for us to purchase. feedback from market participants so far suggests that implementation has been very smooth and that market liquidity remains ample. our interventions have accelerated a trend that had been evident since some time. a steady process of re - integration across financial markets and jurisdictions had been under way since the summer of 2012. what is new today, however, is that lower interest rates in capital markets are increasingly being transmitted through the entire financial intermediation chain. lower funding costs for banks have started to influence the cost of borrowing for households and companies. as bank lending rates are being reduced, new investment projects – previously considered unprofitable – become attractive. in the short - run, this should sustain the demand for credit and investment. indeed, the banks covered in our bank lending survey confirm that the easing of lending conditions

banks ’ health. it also requires banking and market supervisors to resist the temptation to ring - fence liquidity and capital within national boundaries. this is a classic problem of collective action : uncoordinated national reactions to heightened uncertainty could be collectively lethal to the single market for capital. two sets of actions seem to be key in tackling these concerns at their root : one set to strengthen bank balance sheets and another set of actions to break the self - reinforcing loop between bank and sovereign debt risks and move to truly unified european supervision. to strengthen bank balance sheets, first, adequate capital ratios must be reached in the banking system. the eba capital exercise, with eu banks being expected to reach a core tier 1 capital ratio of 9 % by the end of this month, will be an important milestone. regulators should then make sure that the subsequent transition to the basel iii framework does not result in a weakening of the capital buffers. the heterogeneity of capital ratios must also be reduced. the median core tier 1 capital ratio of large euro area banks is not significantly lower than that of their global counterparts. however, the variation in this ratio across institutions is substantially wider in the euro area, introducing asymmetries in banks ’ access to funding and funding costs. second, leverage in the euro area banking system must be reduced. the aggregate leverage ( asset - to - equity ) ratio of large euro area banks remains comparatively high by international and historical standards. 17 the adverse feedback loop between banks and sovereigns, in which doubts about the solvency of the sovereigns feed doubts about the solvency of the banks, and vice versa, will be broken more readily by the establishment of a true banking union. see, for example, v. acharya and s. viswanathan, “ leverage, moral hazard and liquidity ”, journal of finance, vol. 66, no 1, 2011 ; f. allen and d. gale, “ financial contagion ”, journal of political economy, vol. 108, no. 1, 2000 ; and m. brunnermeier and l. h. pedersen, “ market liquidity and funding liquidity ”, review of financial studies, vol. 22, no 6, 2009. for more information on the deleveraging process in the euro area banking system, see special feature a, financial stability review, ecb, june 2012. bis central bankers ’ speeches this should include the creation of a pan - euro