all on supporting bank lending to the real economy with longer - term refinancing operations. unlike the long - term operations we launched in 2009 and again between the end of 2011 and early 2012, these targeted refinancing operations are, for the most part, conditional. in other words, any bank, starting in march this year, can have a long - term loan from the ecb at a very advantageous rate only if its lending to businesses and households increases at a higher pace than in the recent past. the banks have, to date borrowed an amount totalling just under €400 billion. this has been critical in stimulating the pick - up in bank lending that we are currently witnessing. later in 2014, however, the inflation outlook worsened due to the steep fall in oil prices. very low oil - driven inflation is not necessarily problematic for the central bank if that inflation is perceived as being temporary and if, as a consequence, inflation expectations remain unchanged. but what we saw was that inflation expectations were tending, at all horizons, to become dis - anchored from our price stability objective and increasingly affected by the low level of current inflation. this called for monetary policy to shift up a gear, for two reasons. first, when policy interest rates are at zero – as was the case by that time – falling inflation expectations imply a rise in real interest rates, which amounts to a tightening of our monetary policy stance. if left unaddressed, that could have started a further fall in inflation expectations and a sharper tightening of the monetary stance. second, though oil price movements can permanently affect the price level, they should not exert a longer - term influence on the inflation rate. so the fact that we were seeing longerterm inflation expectations responding to low oil prices was a source of concern. it suggested, perhaps, that people believed the central bank ’ s scope of action to achieve its objective was in some way constrained, and hence where inflation would settle was uncertain. it was in that context that we launched our asset purchase programme in september last year, and expanded it in january this year to include public sector securities. the transition from a monetary policy based on adjusting short - term interest rates to one carried out through asset purchases constituted, in reality, a natural evolution. but it nonetheless helped dispel some misunderstandings about the meaning and boundaries of the ecb ’ s mandate, and confirmed the governing council ’ s independence of judgement and of decision - making from the political views

term funding of longer - term assets. first, investors in money market mutual and other investment funds that are allowed to maintain a fixed net asset value of $ 1 have an incentive to run if they think their fund will “ break the buck. ” thus, if the fixed $ 1 net asset value is eliminated and the share values of such funds are required to float with their market values, shadow bank reliance on this source of short - term funding and the associated threat of disruptive runs would be greatly reduced. second, the potential disruptions to funding stemming from the repo financing of shadow banks should be ended. one of the sources of instability during the crisis was repo runs, particularly on repo borrowers using subprime mortgage - related assets as collateral. essentially, these borrowers funded long - term assets of relatively low quality with very shortterm liabilities. these practices would be greatly reduced by rolling back the bankruptcy law for repo collateral to the pre - 2005 rules. prior to then, if a repo borrower defaulted, mortgage - related collateral could not be immediately taken and sold by the creditors. returning to these rules would discourage the use of mortgage - related assets as repo collateral and reduce the potential for repo runs. term lending through securitization would continue, probably at a smaller scale, with more closely matched term wholesale funding provided by institutional investors such as mutual funds, pension funds and life insurance companies. these changes to the rules for money market funds and repo instruments would increase the stability of the shadow banking system because term lending outside the safety net would be less dependent on “ demandable ” funding and more reliant on term funding, and the pricing of risk would better reflect the actual risk incurred. a final note : implications for monetary policy finally, as a member of the federal open market committee, i realize that we must consider the potential effects of these proposals on the conduct of monetary policy. the impact could bis central bankers ’ speeches be significant because, as currently practiced, monetary policy operations are channeled through a limited number of counterparties called primary dealers. these dealers are required to participate in all auctions of u. s. government debt and represent a key element in the implementation of policy. currently, there are only 20 primary dealers. they are the largest financial firms operating in the united states, and most are affiliated with commercial banks. it is with this relationship that the changes i propose could affect the conduct of monetary policy. specifically,