to zero. supply of credit, economic activity and inflation. 2 hence, there is a lower bound to nominal interest rates. this lower bound introduces an asymmetry into the conduct of monetary policy. this asymmetry means that monetary policy is potentially very effective in combating high inflation episodes, but less so in combating deflation or even persistently low inflation. 3 in the years that followed the great financial crisis, in a context of significant disinflationary pressures, the proximity of interest rates to their lower bound led the ecb to introduce a set of non - standard measures to provide sufficient monetary stimulus to preserve price stability. among these measures, the asset purchase programme ( app ), the targeted longer - term refinancing operations ( tltros ) 4 and the forward guidance on the future path of interest rates can be highlighted. see, for example, brunnermeier and koby ( 2018 ) for a discussion of the effect of interest rates on banks ’ profitability and their ability to lend. see banco de espana ( 2019 ) for a detailed discussion. andreeva and garcia - posada ( 2019 ) estimate the impact of tltros on banks ’ lending policies in the euro area. even though there is a broad consensus that these non - standard instruments have been effective in easing financing conditions and in supporting euro area inflation, economic growth and employment, their expansionary effects did not prevent inflation from remaining persistently below the ecb ’ s target for much of the last decade. this led the ecb to review its monetary policy strategy in order to search for ways to better fulfil its price stability mandate. 2 main elements of the ecb ’ s new monetary policy strategy the unanimous adoption in july 2021 of a new monetary policy strategy was an important achievement for the eurosystem. this new strategy has drawn on an immense collective effort by the staff at the ecb and the eurosystem national central banks over 18 months. among the many new developments that this review has brought with it, let me now focus very briefly on three key aspects. for those interested, i provide a more comprehensive description of the new strategy in my article “ the european central bank ’ s new monetary policy strategy ”, the euro yearbook 2022. first, the ecb has adopted a new medium - term inflation target of 2 %. this target is symmetric in the sense that positive and negative deviations of inflation from the target are considered equally undesirable

luis m linde : monetary policy following the great recession presentation by mr luis m linde, governor of the bank of spain, of the papeles de economia issue : “ monetary policy following the great recession ”, fundacion de las cajas de ahorros, madrid, 13 june 2014. * * * let me first thank funcas for their kind invitation to inaugurate this presentation of the issue of the review papeles de economia espanola dedicated to “ monetary policy after the great recession ”. in my address i will briefly review the predominant view before the crisis. i will then discuss how the crisis has affected this consensus. finally, i shall conclude with some thoughts on two changes which, as a result of the foregoing, are already taking place in monetary policy conduct : how to structure its interaction with macro - prudential policy and the role of unconventional monetary tools. before the crisis before the crisis, low inflation, low price volatility and the high degree of economic stability attained in the advanced economies enabled a certain consensus to be forged on what the essential components of a successful monetary policy should be. monetary policy would be delegated to an independent central bank whose remit saw the maintenance of price stability as its main objective. this objective, in turn, could be translated into a more explicit goal in terms of inflation targets. to fulfil its mandate, the central bank would confine itself to controlling the short - term interest rate. its interventions would be transmitted to the real economy through three main channels : the long - term interest rate, inflation expectations and financial asset prices. the credit channel played a secondary role. indeed, in most of the macroeconomic models used by central banks, the private banking sector would play a marginal role, if any at all. the assumption of financial market efficiency and self - regulation meant that credit was not a central variable. the consensus then prevailing also had it that, in order to ensure financial stability, it sufficed to supplement price stability with regulatory and micro - prudential supervisory policy action geared to ensuring the strength of individual credit institutions. in step with this concept, the role of monetary policy in the face of potential risks to financial stability would be confined to cleaning up or repairing damage when such risks ultimately materialised. the federal reserve ’ s measures following the bursting of the “ dot. com ” bubble illustrate this type of conduct. the crisis from the summer of 2007 and, above all