from the demand side of the economy. therefore, the implications of the " new economy " for monetary policy are far from clear. monetary policy - makers, whose aim is to maintain price stability, need to exercise particular caution in such an environment of change. i am confident that the ecb is well equipped to cope with this challenge, not least due to the " full information approach " chosen in the form of the two - pillar - strategy. of course, not only central bankers face uncertainty, but also private agents. given this situation, the central bank itself must be an even greater source of stability. it must not only avoid any actions which may bring uncertainty to the economy, but must try to stabilise the expectations of private agents. when private agents are uncertain about the objective and the commitment of the central bank to this objective, they tend to shorten their planning horizons. they therefore become less predictable, which ultimately leads to a less foreseeable economic environment. thus, it is crucial for a central bank to define its policy objective and its strategy clearly and to provide a stable and broadly predictable pattern of behaviour to the public. in addition, central banks should avoid pursuing an activist monetary policy, i. e. they should avoid attempts to fine - tune the economy. in general, the limited knowledge of the monetary transmission process favours a clear medium - term orientation in order to accurately assess the risks to price stability. the current monetary and economic situation in the euro area let me finally turn to the current monetary and economic situation and its implications for monetary policy. as you are no doubt aware, the ecb has kept interest rates unchanged since the beginning of october last year. this policy reflects the fact that risks to price stability in the medium term have become more balanced over the past few months, although some factors which may pose upward risks still remain. starting with the first pillar of the monetary policy strategy of the ecb, monetary data for december 2000 confirmed the moderation of monetary dynamics, which has been observed since the spring of last year. the three - month average of the annual growth rates of m3, covering the period from october to december, stood at 5. 0 %, slightly lower than the 5. 1 % for the period from september to november 2000. hence, the risks to price stability from the monetary side have become increasingly more balanced. however, some caution is still warranted, given the previous protracted period of upward deviations of m3 growth from the reference value of

sabine lautenschlager : fostering global growth speech by ms sabine lautenschlager, member of the executive board of the european central bank, at the panel during the g30 international banking seminar, lima, 11 october 2015. * * * i would like to thank jacob and jean - claude for inviting me to participate in this panel. you will not be surprised that i will focus on the growth challenge faced by the euro area countries in my intervention. let me stress from the outset that i believe that the euro area can make a much stronger contribution to global growth than it has done so far. but for this to happen, we need a stronger reform impetus in many euro area countries. to substantiate this claim, i would like to address two questions : first, where do we stand on growth and reforms in the euro area? and second, which structural reforms are still needed to support stronger and sustainable growth? where do we stand on growth and reforms in the euro area? growth has been recovering in the euro area, albeit at a modest pace. output growth has been gathering pace throughout 2014 and in the first half of 2015 and employment has been increasing. however, developments are still uneven across member countries and it is not clear that the recovery can be sustained in the medium term. our main concern is that across euro area countries domestic vulnerabilities are still very large, which implies a limited ability to withstand adverse external shocks and to kick start a new phase of sustainable growth. the vulnerabilities of many euro area countries are related to the high stock of debt, both public and private, and to a number of structural rigidities and institutional bottlenecks that prevent an optimal allocation of resources across factors of production, and thus limit total factor productivity growth. the current environment not only urgently calls for the implementation of structural reforms, but also provides the right conditions for their implementation. with our monetary policy, the ecb is greatly contributing to an environment favourable to implementing structural reforms : our accommodative monetary policy stance helps countries to gain time, time to implement the necessary measures to increase resilience and thus support sustainable growth. however, there is only a limited role for demand - side policies. fiscal space is limited and monetary policy cannot carry the burden of the adjustment alone. for the euro area to become more resilient and sustain stronger growth, national governments need to bring about further structural change 1. work in this regard has already started, and