asset classes and to generate incentives for banks to rebalance their portfolios towards assets with higher risk - adjusted returns – such as loans to firms and households. overall, these measures have been designed to complement each other and have proved effective and adaptable to the series of shocks which have hit the euro area economy since their introduction. indeed, the deposit rate has been reduced further ( it now stands at – 0. 4 % ). this decrease into more negative territory incentivises banks to invest the liquidity they receive as a consequence of the asset purchases into longer - maturity and higher - yielding assets. the app has been recalibrated since its introduction and in early 2016 the governing council announced four additional targeted longer - term refinancing operations ( tltro - ii ) to further support credit availability to euro area firms and households. all these elements adopted in the third phase are still in place. moreover, the ecb has adopted an integrated system of forward guidance that governs the future path of asset purchases and short - term interest rates, as well as the sequencing of these different policy tools. given their novelty, scope, and potential interaction with other public policies, communicating the merits of these measures proved to be much more difficult than before the crisis. a debate evolved around the premise that central bank purchases of sovereign bonds ventured into the realm of fiscal policy. after all, in the few preceding years of the crisis public debt had surged to high levels. is the decision to purchase public securities one which can be seen as overstepping the limits of “ instrument independence ”? in particular, how could the ecb avoid being pressured by political forces into alleviating debt servicing costs through continued purchases of government bonds? would such purchases not have to be conducted above and beyond what would be appropriate for monetary policy purposes? in other words, are we back to weber ’ s dilemma between gesinnungs - und verantwortungsethik and are we not at risk of resolving the dilemma in an opportunistic way, achieving “ good ” goals by dubious means? public debates have pivoted precisely around such concerns. if it did occur, such overstepping of the confines that society has laid down for the central bank mandate would undermine central banks ’ independence and the legitimacy of their instruments and would ultimately pave the way 5 / 8 bis central bankers'speeches for higher inflation. in the light of these risks, how can we be sure that the measures

bank ’ s narrow price stability objective, and not of other public policy goals. our non - standard measures have been designed in such a way that they cannot compensate for failures in other policy areas. they have made a crucial contribution to preserving the very favourable financing conditions that are supporting the economic upturn and the sustained adjustment in the inflation path towards our aim. the euro area economy, including the public sector, currently benefits from very low interest rates. it is important for everyone to realise that our monetary policy decisions are only guided by our price stability mandate. in the light of this, fiscal authorities and borrowers in the euro area should be long - sighted enough and plan sufficiently ahead to prepare themselves for the time when it will be appropriate for us to start a gradual process of policy normalisation. in using novel instruments to reach our goal, we have been mindful of the principle that, while “ instrument independence ” is critical for us to be able to deliver on our treaty mandate, it does not excuse us from basing our choices on the law and on economic effectiveness. in this respect, we have been striving for two other important public policy virtues, also famously highlighted by max weber : augenmaß und verantwortungsgefuhl ( which i would translate as prudence and sense of responsibility ). in designing our instruments, we implemented provisions and safeguards ensuring prudence. in deciding to act, in lieu of letting events march on, we took responsibility for our price stability mandate. by ensuring price stability, monetary policy creates one of the conditions for a thriving social market economy. monetary policy alone, however, cannot ensure prosperity. sound economic policies are indispensable to unlocking the sources of employment and growth in economic and monetary union. member states need to live up to their joint responsibility for the stability of the euro area and step up their efforts to conduct fiscal and economic policies in a way that supports the smooth functioning of monetary union. 1 see willem buiter ( 2016 ), “ dysfunctional central banking ; the end of independent central banks or a return to ‘ narrow central banking ’ – or both? ”, global economics view, citi research, 21 december ; otmar issing ( 2016 ), central banks – from overburdening to decline?, safe white paper series, no 42 ; jakob de haan and sylvester c. w. eijffinger ( 2017 ), central bank independence under threat?, cepr policy insight