declines in trading and a spike in volatility. in short, the global financial system came close to seizing up. central banks stepped into the breach, addressing this unprecedented market failure. the ecb was in the vanguard, acting to contain these tensions through both standard and nonstandard policy measures in full consistency with our mandate to maintain price stability, the governing council reduced the ecb ’ s key interest rates rapidly. the current very low level of interest rates is unprecedented throughout the euro area. together with our credible anchoring of inflation expectations, these policy actions have resulted in a considerable easing of nominal and real monetary conditions in the euro area. moreover, we have gone beyond standard interest rate cuts by adopting several “ nonstandard ” monetary policy measures. as i have described in the past, collectively these measures embody our policy of “ enhanced credit support ” : fixed - rate full allotment ; expansion of collateral ; lengthening maturities of operations ; liquidity provision in foreign currencies ; and financial market support through a measured but significant covered bonds purchase programme. this policy has been designed to support the flow of credit over and above what could be achieved through interest rate cuts alone. avoiding dependence and addiction : exit strategies emergency treatment and strong medicines are sometimes necessary. but, if their use is prolonged, they can lead to dependence and even addiction. eventually, the administration of painkillers must be stopped if patients are to get back on their own two feet. this brings me to the exit from our non - standard monetary policy measures. the rationale for exit from these measures is the inverse of the rationale for their implementation. we have introduced exceptional measures under exceptional circumstances. these measures will have to be unwound when the situation normalises and the rationale for the measures fades away. the cornerstone of our exit strategy is its link to our primary objective of price stability. our actions throughout the crisis have been taken resolutely with this primary objective in mind. thus, any non - standard measure whose continuation would pose a threat to the achievement of price stability must be undone promptly and unequivocally. as i said on behalf of the governing council, looking ahead, not all our liquidity measures will be needed to the same extent as in the past. accordingly, we will make sure that the extraordinary liquidity measures taken are phased out in a timely and gradual fashion and that the liquidity provided is absorbed in order to counter effectively any threat to price stability over

tightened. i choose this way of framing the issue primarily because it is widely used by our observers, and because it is sufficiently concise to be easily understood. but, before launching into the analysis, i should add that, precisely because it is simple and pedagogical, this framework is also a very incomplete description of our policy behaviour. overall, because it does not capture the very essence of the two - pillar strategy, based on an economic assessment of medium - term risks to price stability, on the one hand, and a cross - checking based on medium to longer - term risks assessed though our monetary analysis, on the other. also, because such representations of our policy are not sufficiently state - contingent, whereas my colleagues and i are far from being exclusively guided by mechanical configurations of indicators, but are very interested in the contingencies, and finally take our decisions on the basis of synthetic judgement enlightened by multiple experiences. as i often say, collegial wisdom is of the essence in central banking. this underscores the tension between describing policy simply and implementing policy simply : simple descriptions of policy need not – and indeed never do – mean simple policy behaviour. assuming that the parameters attached to the various indicator variables in the reaction function indeed capture the deep strategic preferences of the central bank, empirical estimates of these coefficients are often used to quantify the strength with which the central bank intends to respond to the state of the economy. in other words, these estimated parameters are sometimes viewed as objective measures of strategic “ activism ” in monetary policy. a central bank would qualify as strategically more passive – or less active – than another central bank if the estimated coefficient attached to inflation expectations in deviation from the central bank ’ s objective, and the estimated coefficient penalising the indicator of macroeconomic slack, turned out to be smaller. why would this central bank qualify as more “ passive ”? because, for given variances of inflation and real activity, this central bank would indeed be inclined to take more moderate action in response to changes in the outlook. it would move its policy rate by narrower margins – and perhaps more infrequently – than its more “ activist ” counterpart. moreover, as analysts typically append a partial adjustment mechanism to the representation of how the central bank interest rate responds to the economic state, there is an additional source of “ activism ” – or “ passivity ” – that would emerge from these simple empirics. this is the inertia coefficient attached