on monetary financing, since we have placed a number of safeguards on our interventions. we do not buy government bonds in the primary market, which is explicitly forbidden under article 123. and neither do we act in the secondary market in a way which could be perceived as equivalent to acting in the primary market. the eurosystem has put in place a blackout period, and so does not buy in periods around the date of a new issuance. purchases are also subject to an issue share limit and an issuer limit. these limits ensure that we would not constitute a blocking minority for collective action clauses if such clauses were ever triggered. the european court of justice explicitly highlighted these limits when deciding upon the lawfulness of our actions. second, it is proportionate, in the sense that it is both necessary and suitable to secure our price stability objective. as short - term interest rates move closer to their effective lower bound, it inevitably becomes harder for central banks to steer the economy by means of conventional policy. so if inflation is too low for too long – as is the risk in the euro area today – other tools become necessary. two years ago, the governing council introduced several non - standard measures to unclog the transmission mechanism and avoid a credit crunch. we coined these measures “ credit easing package ”. in january last year, we finally opted for large - scale asset purchases when faced with a period of weak growth, when already low inflation rates were falling further and we saw risks of inflation expectations destabilising. like our previous measures, these purchases belong to the category of credit easing. to fulfil our mandate we need to make use of all instruments at our disposal. the app is a suitable tool because it acts directly on financing costs in the real economy. rather than attempting to boost the economy only through the short end of the curve, it directly lowers yields at longer maturities, decreasing them by compressing the term premium, which in turn influences the cost of credit for firms and households. third, we have designed the programme to limit distortions in relative prices which might have unwanted allocative and distributional consequences. with our government bond purchases we “ mirror the market ”, which means that our interventions are spread across issuers from the various euro area countries on the basis of the ecb ’ s capital key. together with the issuer limits, this ensures breathing space within and across markets for efficient price discovery. indeed, even though yields are very low for certain sovereign issue

##rs, issuers have been able to place new securities in the market in large volumes, which suggests that liquidity has not been materially affected by our actions. thus the most difficult part of our programme is our corporate bond purchases, since they extend into less liquid markets and increase the risk of distortions in relative prices – in particular between larger and smaller firms. but our activities cannot be evaluated in separation ; they must be judged in a holistic manner. indeed, up to now the decline in bank lending rates for small loans to euro area companies – which are mainly for small and medium - sized enterprises ( smes ) – has been stronger than for large loans to bigger companies. this suggests that bank lending conditions have improved disproportionately for euro area smes since the announcement of our credit easing measures two years ago. as a result, fewer smes are reporting that credit has been a limiting factor for their businesses. this should only continue as our measures are fully rolled out and reach their maximum bis central bankers ’ speeches impact. in other words, the app, coupled with our other credit easing measures, has reduced distortions caused by market fragmentation in the euro area. still, we know that the longer unconventional policy lasts, the greater the risk of distortions appearing and diminishing its effectiveness over time. the principle of proportionality also implies that we should only use such measures for as short a time as is necessary to fulfil our mandate. that is why, when the economy improves and inflation returns to our objective, we will have to reassess, adjust and ultimately phase out our purchase programmes and other non - standard measures. but the surest way to reach that point is to stay true to the course we are on now. if we were to change speed or direction too soon, it would only set back the recovery of inflation and delay the day that interest rate normalisation can happen. we will decide upon this in full independence, in the interests of price stability, impervious to the wishes of any interest group with any partial agenda. other policies can support the speed with which inflation returns to 2 % can other policies help in this endeavour? in the inflationary days of the 1970s, some central bankers were so hesitant about the scope of their responsibility that they let price stability depend on others. for example, in the late 1970s the then fed chairman reported to the fomc that “ inflation is going to be left to the federal reserve and that ’