##s more favourable financing conditions. we need to see whether, at some point, there might be side effects that work in the opposite direction. we have to look at this again every time. our monetary policy has so far had a clearly positive impact on financing conditions for firms and households, and is thus supporting growth and inflation. how low can interest rates go before they start to have a constraining rather than a stimulative impact? the traditional view is that interest rates can continue to fall up to the point at which people withdraw their money and put their cash in a safe. for some time now, other economic effects have also been taken into account, with the question being whether, as a whole, further interest rate cuts have the desired monetary policy effect. if people don ’ t earn any interest these days, they need to save even more for their old age and can consume less as a result. yes, but you do need to see the overall picture. the size of incomes is the key factor when it comes to economic development and, in the final analysis, also savings : the higher are incomes, the more can be saved. and expansionary monetary policy boosts incomes, partly through employment and wage growth. furthermore, there are not just savers ; there are also borrowers who benefit from low interest rates. so you could lower interest rates even further? yes, we see enough leeway for further interest rate cuts, should they be necessary. there are some countries, like denmark and switzerland, that have lowered interest rates even further. could the ecb cut interest rates as far as those countries have? we do of course look at the examples in other countries. that said, the euro area is a much larger economy than denmark or switzerland, so the situations there are only comparable to a limited extent. your monetary policy works through the entire financial system. how important is it in this context for the banks to make decent profits? it can be important at least. this is why we adopted “ tiering ”, or allowances up to which banks can deposit excess liquidity with the ecb at 0 % interest. a monetary policy problem would arise 3 / 6 bis central bankers'speeches if the banks became reluctant to grant loans due to excessively weak earnings. but we haven ’ t observed that yet. nevertheless, people are asking whether, with such low interest rates, we are approaching the point where monetary policy is no longer effective. monetary policy is still effective, as

we ’ ve seen over recent years. the fundamental mechanisms have not changed. at the same time, it is clear that we need to act with great care as our interest rates are already negative and we ’ ve already built up a large portfolio of bonds. so why is inflation reacting so little to your monetary policy? we see that wages are rising, particularly in germany. for some time, prices followed suit. but companies are now facing huge uncertainty, due mainly to brexit and the trade conflicts. this is why they are reluctant to pass on the increase in labour costs to their customers. i have a technical question in this context. the ecb is only permitted to buy around onethird of the government bonds issued by each country. some economists have calculated that, with new purchases of €20 billion each month, you will already reach a limit, primarily in germany, after less than a year. according to our calculations, this may not become a problem for an extended period of time, and in any case not for at least as long as we can project bond availability conditions with some confidence. it is important to keep in mind that the forecasts depend on many parameters you assume. one of these is the price elasticity of those investors who hold the bonds in the private sector. building on past experience, these investors have proven more willing to sell, even in response to relatively small price adjustments, than we had anticipated. this makes our life easier as it eases constraints. for some time to come means that you believe the limits for germany will not be reached in the next one to two years? if we had seen any potential constraints in this regard in the near future, we would have included this in the calibration of the additional purchases. do you assume that some countries will increase their debt? no, such considerations do not play a role in our calculations. we work on the basis of whatever the governments have already agreed. if the limit is reached, the ecb could of course also deviate from the key according to which purchases are weighted by the size of the respective euro area countries. we will continue to purchase with a view to bringing the share of the pspp portfolio into close alignment with the respective national central banks ’ subscription to the ecb capital key. some critics also accuse the ecb of effecting its monetary policy primarily via the exchange rate. the sole objective of our monetary policy is to fulfil our mandate of maintaining price stability. the exchange rate