. why is this mechanism no longer working? as explained earlier, there are other reasons for the recent market movements. looking back over a longer period, the low interest rates have clearly given a boost to stock markets. how much longer will the period of low interest rates last? as long as needed. rates will have to stay low until we see that the inflation rate in the euro area is moving towards our objective of just below 2 %. we at the ecb don ’ t want this phase bis central bankers ’ speeches of low rates to become normality either. but we still have a pressing need for the low rates so as to get inflation firmly back to 2 % and to protect the euro area recovery. but we are a long way from 2 % inflation because of the low oil price. the ecb will have to lower its inflation forecast. our next staff inflation projections are due in march. already in january we said that inflation will only very slowly move back towards 2 %. compared with the situation in december we are seeing new downside risks. the main causes are the falling price of oil and a decline in global growth. in the past few days we have also seen greater volatility on the financial markets. if that continues for too long, it can also increase the risk of a rise in inflation being delayed. the continued low interest rates are unsettling savers, especially in germany. what ’ s your advice to savers? we have to get inflation to below, but close to, 2 % again ; that has been our definition of price stability for a long time. why are interest rates so low? because the return on capital has declined in the economy. to keep the low interest phase as short as possible we need more private investment as well as government policies which create the conditions for profitable projects to emerge. meanwhile we can help savers best by keeping policy interest rates low. do governments have to do more to protect savers from losses in the value of their assets, for instance by cutting taxes? our advice to euro area governments is to use the savings gained from the lower cost of debt refinancing in a growth - friendly way to help their citizens. they could, for example, reduce taxes on labour, create more incentives for private investment, or reduce their deficits where required. in many euro area countries the investment climate is too unfavourable. does the ecb need to become even more expansionary in order to prevent deflation? this

should be partners at the global level. since 1999 the g20 has turned out to be a very important international policy forum for dialogue and consensus - building among systemically important economies, both industrialised and emerging. india held its presidency in 2002. i have a very vivid memory of this meeting in delhi where, for the first time, the international community through the g20 endorsed the idea of the voluntary “ principles “ for prevention and solution of sovereign crises, which i had myself suggested when it appeared that the “ sdrm “ was not workable. the g20 has facilitated consensus on crucial policy issues of the international reform in particular, on the russian crisis see e. g. b. pinto, e. gurvich and s. ulatov, “ lessons from the russian crisis of 1998 and recovery, managing volatility and crises : a practitioner's guide ”, 2004, draft. agenda. it has organised several workshops to deepen the understanding of issues of global relevance and has engaged in a process of peer review to promote countries ’ implementation of market - based economic systems. in the early years of its existence, the g20 put special emphasis on financial stability and crisis prevention, including aspects such as prudent debt management, domestic financial deepening and exchange rate regimes. its agenda has widened since then. it now includes also the global policy challenges ahead of us, such as development, energy and climate change. in my view, it is the format of the g20 which makes it a success. not too large, not too small! its composition and size strike a balance between giving the g20 a high degree of legitimacy while at the same time also allowing frank dialogue between the members. in recent years, the g20 has also played an active role in contributing to the reform of the bretton woods institutions, the international monetary fund ( imf ) and the world bank. it has been committed to strengthening their credibility, effectiveness and legitimacy. it has also followed closely the progress made with policy and internal governance issues. alongside the g7 and the g20, significant reform efforts are indeed under way at the imf to adapt the institution to a new environment and a new set of players. this is my last example of the substantial developments that the governance of the world economy is experiencing in terms of format. the key issues here are quota and voice, two important elements defining the representation of fund members. 16 in addition, the way the imf carries out its policy work