united kingdom. 6 according to these studies, what matters is the extent to which and for how long central banks ’ holdings reduce the availability of assets by removing them from the market. this implies that we can continue to exert downward pressure on the yield curve by keeping our stock of asset holdings at a high level for a prolonged period. let me first state the obvious : even if we reduce the monthly flow of net purchases, we will continue to increase the size of our balance sheet. and let me add as a second consideration for 2 / 4 bis central bankers'speeches later : in any case, the eurosystem will remain in the coming years a major buyer of eurodenominated bonds thanks to our reinvestment commitment, which we took in december 2015 and which was perhaps not widely enough noticed : the repayments that we will obtain when bonds reach their maturity date will be fully reinvested, thus keeping the size of our asset holdings unchanged. most importantly, our monetary policy is based on a set of instruments [ slide ] : it is not a solo, but a quartet. on top of qe, we play with our policy interest rates, our forward guidance and the provision of liquidity to financial institutions. 2 / perhaps the most unconventional policy is the use of negative interest rates. i insist on the fact that this measure is the most unconventional because for most people, nominal interest rates are positive. it is true that negative interest rates have their limitations ; i have already stressed them in the past. 7 and at our governing council ’ s meeting in tallinn last june, we clarified these limitations in our forward guidance stating that we do not intend to lower our deposit facility rate below its current level of – 0. 40 %. but slightly negative interest rates have their virtues, even if they are not very popular among bankers. first, by removing the zero lower bound constraint on expectations of future short - term interest rates, they contribute to easing financial conditions by lowering rates along the curve, with a positive impact on the demand for credit by firms. second, the negative deposit facility rate ( dfr ) positively interacts with asset purchases. indeed, the portfolio rebalancing effect of qe is reinforced by the negative dfr, as banks with excess liquidity holdings have a stronger incentive to reduce these holdings and put their reserves to work. the truth of the matter is that we have not so far seen significantly detrimental consequences of negative rates on the profitability of banks, notably thanks

are no signs of bubbles forming in our main financing markets : on the whole, developments in the equity markets appear in line with corporate profit forecasts, while evolutions in bond yields also seem consistent with the outlook for inflation and growth. nor are there any signs of excessive credit growth in the financial system. nevertheless, we remain vigilant over all aspects of the current macroeconomic and financial environment. last week the high council for financial stability alerted on potential risks associated with commercial real estate, especially : “ the sharp rise in demand by investors on certain market segments and a high level of prices, in particular office prices in the paris area ”. the hcsf ’ s assessment will be released for public consultation in the coming weeks. we are ready, when needed, to take action with macroprudential measures, to prevent and mitigate any systemic risks that might arise. in sum, monetary policy is doing a great deal to counter weak inflation and support economic activity – it is our duty and we will continue to do so with steadfast resolve : we are consistent in our objective, ready to act with the right instruments, and alert to any possible risks. however, i would like to stress again that “ monetary policy cannot be the only game in town ”. other economic policies also have a crucial role to play. this is precisely what the members of the g20 reiterated in shanghai on 27 february : “ monetary policies will continue to support economic activity and ensure price stability, consistent with central banks ’ mandates, but monetary policy alone cannot lead to balanced growth ”. where there is sufficient margin to do so, fiscal policy must support demand – this is not currently the case in france, but it is in other countries in europe. moreover, structural reforms remain absolutely vital in france, to encourage creations of jobs and of businesses and thus bring the economy back to full potential. at european level, we need to move finally towards a true economic union, in addition to the monetary union embodied in the eurosystem. only by optimising the governance of the euro area can we optimise growth. the current extremely accommodative monetary policy stance creates the ideal conditions for carrying out much - needed reforms. it should not be used instead as an excuse for putting them off : europe and france urgently need to make the most of this opportunity, right now. thank you for your attention. bis central bankers ’ speeches