a selfreinforcing spiral of falling prices and output. against this backdrop, in 2015 the ecb introduced quantitative easing, qe, to provide further monetary policy accommodation. by lowering long - term interest rates, qe has helped to further loosen financing conditions for households and businesses. this in turn should have a positive impact on their spending decisions and, ultimately, on inflation. rebalancing necessity, effectiveness and risks when deciding on monetary policy measures such as qe, decision - makers typically assess policy options along three dimensions : necessity, effectiveness and side effects. since these guiding parameters change over time, continuous monitoring and reassessment are needed. and this is exactly what we are reconsidering right now when reflecting on how to proceed with our qe - program beyond 2017. against this backdrop, let me discuss in a bit more detail how i reflect on the dimension of necessity of at the current juncture. a dimension along which the considerations have changed quite significantly since we first started with qe in early 2015. allow me to highlight four specific elements. first, financing conditions in the euro area are currently very accommodative and highly supportive to growth. this is largely a consequence of previous ecb monetary policy measures. second, financial fragmentation between euro area countries has been reduced. this is reflected in a more homogenous transmission of monetary policy decisions across jurisdictions compared to what we observed during the crisis. third, the economic outlook has improved significantly. specifically, we have now registered twelve quarters of reflationary growth. in other words, three years of economic growth above potential. finally, and most importantly, against the backdrop of an increasingly reflationary environment, the tail risk of a deflationary spiral is no longer imminent. consequently, the main rationale for central bank asset purchases has disappeared. to summarize, assuming the robust economic developments continue we can be confident that inflation will return to levels consistent with our aim of below but close to 2 % over the medium - term. in this environment the necessity of qe is clearly less obvious. at the same time, some may be concerned with the challenges of normalizing monetary policy. however, while there will indeed be challenges along the way, i see no reason to be overly dramatic. let me discuss some considerations that are often overlooked by commentators. first, even if we no longer expand our qe - program, we are still committed to a reinvestment policy. this reinvestment

substantial progress. to improve the balance between liability and control, we therefore need to improve enforcement of the rules. this would help reduce the likelihood of new imbalances and future calls on european risksharing. secondly, the emu would benefit from more private risk - sharing across borders. during the crisis, european governments used taxpayers ’ money to provide support. but private companies, investors and banks shared far fewer risks. improving private risk - sharing would help reduce dependence on public risk - sharing. it could also help smooth idiosyncratic business cycle shocks, as appears to have been the case in the u. s. and germany. does the answer lie in more integration? of course, the key question is : how do we further strengthen the emu? it is often assumed that deeper european integration is the answer, for example by way of more binding policy coordination. many also favor more public risk - sharing, such as the introduction of a european budgetary stabilization fund. further european integration would indeed probably lead to a better functioning emu. however, major steps forward are controversial, and may not be politically feasible in the current environment. in countries like the netherlands, controversy mostly centers around a further increase in public risksharing. the fundamental problem is that member states still differ substantially in terms of adaptability, overall competitiveness and institutional quality. if starting positions differ so much, a stabilization fund might not result in ex - ante fair risk - sharing, but in a quasi - permanent one - way transfer system. therefore, any further increase in public risk - sharing is only desirable if it is accompanied by a significant risk reduction. this however requires a further transfer of sovereignty ; a policy that is equally controversial in many member states. as a result, large leaps forward in integration are presently hard to conceive. given all the steps that have already been taken over the past years, i however believe that with a series of relatively small steps aimed at restoring the balance between liability and control we can already achieve a great deal of improvement. let me therefore conclude by mentioning four no - regret options. first, improve compliance with european fiscal and macro - economic rules, by simplifying and strengthening the rules. second, introduce some form of sovereign debt restructuring mechanism. in the future, it should be ensured that the public debt is sustainable before countries gain access to financial support. third, complete the banking union. reducing systematic differences between banks from different member states will pave the way for a