see the economies would take off like a rocket and so you say inflation is going to accelerate really sharply. i ’ m sure models exist that would have that feature, but given the persistence of inflation, which many models don ’ t fully capture, we are saying we also need to see actual inflation, the outcomes, especially across the indicators ; especially we need to strip out the volatile elements sufficiently in the neighbourhood of where you want to get to. everyone ’ s going to agree : yes, it ’ s credible to say compared to where we are now, these forecasts you have, this 3 / 8 bis central bankers'speeches outlook assessment you have is credible. in order for rates to go up, you have to be forecasting inflation targets however you ’ re interpreting it at that point, and that has to be a credible forecast given that … lane : so, some people will say – you think – that the jump is too big. so, if inflation today is low and you forecast a high number two years from now, it ’ s fair to say, well, we ’ ve not seen it. we ’ re seeing inflation move maybe sometimes in an incremental way. so the connection between the outcome and the forecast is basically saying there ’ s a modelling error and maybe it ’ s safer to wait until the actual realised inflation is not too far away. it ’ s fantastic to have this conversation with you, just a few days after this major event, so thanks again for coming here. i know people in the audience are going to want to ask questions. i have a couple more things. when i listen to mario draghi and particularly the tone of the conversation around fiscal in the last couple of months, which has been slightly different from even his previous comments, and i look at your very explicit charts about the effect on the output gap in the eurozone, it seems to me that the ecb is saying : when it comes to next responding to the ups and downs of the cycle, potentially downs over the next few years, fiscal is the new monetary. is that right? lane : i don ’ t think that ’ s the way to think about it. i ’ ve skipped over it, as i was conscious it was running a bit long – but in the concluding section of the speech, which i ’ m sure is online by now on the ecb website, i do emphasise that our mandate is unconditional. we will do what it takes. whatever

, we will certainly consider making adjustments. substantial work remains to be accomplished before basel ii can " go live. " as you are aware, several areas in particular will require special efforts. data collection and validation are examples. while supervisors are working diligently to provide guidance on what is expected for data warehouses and validation methods, financial institutions are responsible for collecting the data they will need for the advanced approaches. similarly, validation starts with institutions ’ own independent checks on the adequacy of risk management and internal control processes. accordingly, those institutions considering adoption of the advanced approaches at the earliest possible date should now be defining the details of their own implementation plans, including a self - assessment, gap analysis and a remediation plan. the recently issued interagency statement on qualification describes some steps that banking organizations should follow if they wish to be positioned to adopt the final rules at the earliest possible implementation date. the focus on enhanced risk management in basel ii means that banking organizations should not view basel ii preparations with a checklist mentality. rather, they should be moving ahead on many fronts, looking at how to make the fundamental changes needed for better risk identification, measurement, management, and control. by doing so, banking organizations can position themselves to succeed in implementing the accord on a timely basis. we do, however, recognize that a certain time constraint exists for institutions wishing to implement the new framework : on the one hand, those institutions are encouraged to start preparations as soon as possible ; on the other hand, we leave open the possibility that elements of the framework are subject to change. i will not try to pretend that this is a trivial matter. as a former banker, i sympathize with the challenges you face in deciding on investments and upgrades to your systems and personnel. when it comes to basel ii, we recognize that certain details relating to systems and processes will depend on what the final u. s. rule and guidance contain. accordingly, we are available to discuss your implementation efforts at any time and we desire to hear specifics about which elements of the proposal, from your perspective, will demand the greatest investments or appear to generate the greatest uncertainty. using that information, the agencies can then understand where to target resources to assist institutions during the transition to basel ii. we certainly hope that many upgrades made for basel ii are those that would have been made anyway. i would like to say a few words directly to the potential " opt - in " institutions. an institution that does not