services efficiently. various banking models can be successful in this task, if sufficient competition is maintained and decision - making is not distorted by expectations that some banks are too big or too important to fail. the key objective is to ensure a banking sector that is capable of financing the real economy and fulfilling its other important functions. at the same time, this objective cannot be achieved bis central bankers ’ speeches without restoring and further enhancing the resilience of banks and the confidence in the banking sector as a whole. we need a banking sector that is sustainable and does not rely on any extraordinary taxpayer support. this is the aim of the reforms, when more capital and better liquidity buffers are required. this is also the objective of the proposals, which aim at separating insured deposits from high risk - taking activities such as proprietary trading in securities. these prudential and structural reforms and the banking union are actually complementary, supporting each other. we should see that they are carried out. bis central bankers ’ speeches

accommodative for an extended period and will contribute to the euro area ’ s growth outlook, both short - term and long - term. it has been recently argued that there has not been danger of a deflationary spiral in the euro area. i for one have to say that i don ’ t remember or see it that way in light of the empirical evidence. for instance, the european commission in 2013 – 14 was very concerned about the spectre of deflation, and expressed that also publicly. on its part, in january 2015, the ecb launched an expanded asset purchase programme, since the degree of monetary accommodation prevailing at the time was insufficient to adequately address the heightened risks of a prolonged period of low inflation. hicp inflation had indeed been below 1 % since october 2013, and the reasons for low inflation, which were long seen only as temporary, started to indicate second round effects with a deflationary impact. in january 2015, the overall hicp inflation rate was only at 0. 6 %. moreover, the markets were pricing negative inflation in the time horizon of 2 - 3 years with the probability of about 50 %. the degree of monetary policy accommodation was examined and reinforced many times since then. 1 / 3 bis central bankers'speeches only in june 2018 was the governing council able to conclude that progress towards a sustained adjustment in inflation had been substantial. the threat of a deflationary spiral was subsequently avoided. a key lesson of monetary policy of the last 10 years is that timely action is essential to avoid the zero lower bound and an extended period of too low inflation. we don ’ t want to be in the midst of a deflationary spiral until we take action. this is also one of the key lessons of the japanese experience. fast - forward to early 2019. due to the rapidly worsening outlook, the normalisation of monetary policy that started in june 2018 had to be put on hold. the decisions to restart the easing phase in march this year and to resume the net asset purchases in september were timely and taken in response to the continued shortfall of inflation with respect to our aim. ladies and gentlemen, while i have focused on monetary policy, many factors that weaken the economic outlook originate beyond its realm. yet the connection between seemingly non - monetary challenges and risk factors on the one hand, and monetary policy on the other, is actually much stronger than initially appears. this is because many of these challenges, if more permanent, have the potential of affecting