of hitting the lower bound of short - term interest rates. the room for manoeuvre for conventional monetary policy would thus be narrowed. in addition, fragmented interbank markets could hamper the pass - through from conventional policy rates to longer - term interest rates. another argument points to non - banks playing a more important role in the transmission of monetary policy and highlights the divergence of short - term rates for banks and non - banks. and, finally, the demand for safe assets is said to have risen markedly. ladies and gentlemen, i do not rule out the possibility that structural shifts and frictions in financial markets and the broader economy may require some tinkering with the operational framework. but it is too early to draw such conclusions now at the beginning of the normalisation process. it is quite obvious that the non - standard monetary policy measures themselves have created – or at least added to – the perceived challenges i have just highlighted. let me give you three examples. with the app, the eurosystem itself reduced the amount of safe assets in the hands of the nonbank private sector. secondly, by creating large quantities of excess liquidity, the eurosystem has contributed to persistently weak interbank market activity. and, thirdly, the ultra - expansionary monetary policy compressed long - term interest rates for a prolonged period of time, which may also feed into natural rate estimates. apart from that, a bundesbank analysis has stressed – and other studies have come to the same finding – that those natural rate estimates are highly uncertain. 5 for a figurative comparison, let ’ s look at hospitals. critically ill patients often receive mechanical ventilation. after some time, this can weaken their respiratory muscles. in order to prevent this, 3 / 5 bis central bankers'speeches best practice suggests not prolonging support unnecessarily, as it involves increasing risks for the patient and a reduced quality of life. instead, physicians apply a gradual liberalisation from mechanical ventilation, the so - called “ weaning ”. 6 admittedly, medical reality is much more complex than economists and bank managers may think. hence, my wife – a practising physician – has advised me to refrain from medical analogies because we are prone to misinterpreting them. thus, i risk trouble at home – kind of disregarding her advice –, but i think you get the point. 3. 3 reconciling effectiveness and efficiency it goes without saying that monetary policy implementation

implied by an overly prolonged period of low inflation. 1 / 5 bis central bankers'speeches today, ten years after the financial crisis escalated, policy rates are still at historic lows. the eurosystem has accumulated a huge portfolio of securities of various kinds, and refinancing operations offered to banks have remained more than generous. as a result, excess liquidity stands at a level nine times higher than after the lehman collapse, and monetary policy is roughly as expansionary as it was when the crisis was raging. put differently, the remaining policy space is rather limited. 3 where are we going? given where we are now, a well - known joke comes to mind : a tourist in a big city asks one of the locals for directions to the train station. the local replies, “ well sir, if i were you, i wouldn ’ t start from here ”. but where are we going? or to be more precise, where should we be going? to some observers, our destination, the “ new normal ”, should not look that different from the status quo. among other things, they argue that non - standard measures such as large - scale asset purchases proved their worth during the crisis. therefore, they should remain in the monetary policy toolbox and be applied under normal conditions as well. 3. 1 guiding principles ladies and gentlemen, the scottish philosopher david hume postulated that we cannot derive the “ ought ” from the “ is ”, the so - called hume ’ s law. admittedly, we all know that “ the normative force of the factual ” can be strong. but this force arises from a general acceptance of the current state. instead of pre - determining details of the new normal or ruling out potentially relevant alternatives based on the status quo, we need to resort to guiding principles which are well - established and generally agreed upon. admittedly, acting in accordance with a principle should not be viewed as an end in itself. but at a time when many european citizens seem to be falling prey to scepticism about the historical project of european integration, i would like to highlight the positive and optimistic guidance that is laid out in the european treaties. the european union aims at promoting the well - being of its citizens, ensuring economic and social progress, and improving the living and working conditions of our peoples. to achieve these broader aims, the treaties provide guidance for policymakers by setting objectives and principles such as price stability, sound public finances, and market orientation. in