mario draghi : ecb press conference – introductory statement introductory statement by mr mario draghi, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 12 january 2012. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. let me wish you all a happy new year. we will now report on the outcome of today ’ s meeting of the governing council. based on its regular economic and monetary analyses, the governing council decided today to keep the key ecb interest rates unchanged, following the 25 basis point decreases on 3 november and 8 december 2011. the information that has become available since early december broadly confirms our previous assessment. inflation is likely to stay above 2 % for several months to come, before declining to below 2 %. at the same time, the underlying pace of monetary expansion remains moderate. as expected, ongoing financial market tensions continue to dampen economic activity in the euro area, while, according to some recent survey indicators, there are tentative signs of a stabilisation in activity at low levels. the economic outlook remains subject to high uncertainty and substantial downside risks. in such an environment, cost, wage and price pressures in the euro area should remain modest and inflation rates should develop in line with price stability over the policy - relevant horizon. overall, it is essential for monetary policy to maintain price stability over the medium term, thereby ensuring a firm anchoring of inflation expectations in the euro area in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. such anchoring is a prerequisite for monetary policy to make its contribution towards supporting economic growth and job creation in the euro area. a very thorough analysis of all incoming data and developments over the period ahead is warranted. the provision of liquidity and the allotment modes for refinancing operations will continue to support euro area banks, and thus the financing of the real economy. the extensive recourse to the first three - year refinancing operation indicates that our non - standard policy measures are providing a substantial contribution to improving the funding situation of banks, thereby supporting financing conditions and confidence. in addition, we are actively working towards the implementation of all the measures announced at our december meeting, which should provide additional support to the economy. as stated on previous occasions, all the nonstandard monetary policy measures are

conservative posture of our banks with prudent loan / deposit ratios. saudi arabia has always been cognizant of risks inherent in the leveraged and leniently regulated model. a sustainable model is one which supports resiliency of the financial system in a crisis. in particular, the crisis made clear that regulators need to have a macroprudential framework for the system as a whole, as well as focusing on the microprudential risk management of each individual bank. 6. regulatory challenges recent efforts by the g20 and other global entities ( basel committee, fsb, g20 & imf ) in addressing system pitfalls and weaknesses show the seriousness of the problem as well as the need for remedial action. it is well - known that crises are a recurring phenomenon, warranting appropriate countermeasures to contain systemic risks of the scale seen in 2007 / 2008. some big challenges in reforming the world ’ s financial system still remain, however. allow me to say a few words on this point. in the past two years or so, the g20 has issued calls for coordinating financial regulations and their reforms across multiple issues, such as capital and liquidity requirements, derivative instruments, and orderly resolution of failing banks. however, the g20 process is facing increasing resistance within some member countries on these measures for reasons of domestic politics and practicality of the proposed reforms in some g20 economies. for example, it is agreed that a sound macroprudential framework needs to be in place. the regulators will be expected to decide when the pace of credit expansion is unhealthy. similarly, sifi ’ s definition has proven to be contentious. on bank capital adequacy, some countries ( such as the uk and switzerland ) have indicated that the standards they apply will be tighter than the minimum set out in basel iii. this represents a cross - border challenge to regulators because banks from relatively lightlyregulated countries will have a competitive advantage. it was this sort of problem that led to a “ race to the bottom ” in regulatory standards in the pre - crisis years, and we must strive to avoid this happening again. regulatory arbitrage is a serious threat. for financial institutions, which are systemically important to the world economy ( and that therefore are practically “ too big to fail ” ), there needs to be additional rules. the fsb will report to the g20 summit in november on which banks and insurance companies qualify, and what additional