, the expected continuing economic recovery and the corresponding gradual absorption of slack in the euro area economy. however, progress towards a durable and self - sustaining convergence of inflation towards our objective is not yet sufficiently convincing. thus, a very substantial degree of monetary accommodation is still needed to secure a sustained return of inflation towards levels below, but close to, 2 % over the medium term – in line with the ecb ’ s mandate. as affirmed by the governing council at its last monetary policy meeting on 7 september, we expect the key ecb interest rates to remain at present levels for an extended period of time, and well past the horizon of the net asset purchases. our asset purchase programme ( app ), at the current monthly pace of €60 billion, is intended to run until the end of december this year, or beyond, if necessary, and in any case until the governing council sees a sustained adjustment in the path of inflation consistent with its inflation aim. the net purchases are made alongside reinvestments of the principal payments from maturing securities purchased under the app. later this year we will decide on the calibration of our policy instruments beyond the end of 2017, taking into account the expected path of inflation and the financial conditions needed for a sustained return of inflation rates towards our objective. 1 / 3 bis central bankers'speeches the ecb ’ s monetary policy measures and the favourable effects they are having on borrowing conditions for firms and households, access to financing and credit flows across the euro area are supporting domestic demand and are also facilitating the deleveraging process. in order to reap the full benefits of our monetary policy measures, actions in other economic policy areas remain necessary to strengthen long - term growth and resilience in the euro area. meanwhile, the condition and resilience of the euro area banking sector has continued to improve. euro area banks ’ cet1 capital ratios remain at a solid level of about 14 %, whereas profitability has stabilised on the back of the strengthening recovery. some weak banks have been successfully resolved with the impact on the rest of the euro area banking sector being well contained. notwithstanding these positive developments, important challenges remain, including the still subdued profitability, structural challenges in some parts of the euro area banking sector, such as the presence of excess capacity and cost inefficiencies, as well as – in a few countries – the persistently high stock of non - performing loans ( npls ). on aggregate, however, further progress

a well - functioning macro - prudential framework needs the support of market participants, also in qualitative terms, as rigorous monitoring of systemic risks will require continuous market intelligence. contact with market participants will be essential for detecting important trends, such as growing financial imbalances, convergence of business models, similarities in investment strategies and innovations in financial instruments. information gathered via market intelligence could, for example, be valuable in capturing market developments and perceptions not yet apparent in the most recent data and complement more quantitative - based surveillance work. it will also allow combining accounting - based information on the banking and financial sectors at large with firms ’ risk management views and their perception of the main risks further down the road. as such, in setting up an effective eu - wide risk surveillance process, importance is being given to the establishment of a structured dialogue with the financial industry focused on financial vulnerabilities at the system - wide level. it could take place on a regular basis both among high - level representatives and at the working level. 4. towards a more stable financial system this brings me to the last part of my remarks today. the move towards a more stable financial system has been set in motion on a number of different fronts. i mentioned the enhancement of macro - prudential analysis and policy with a view to identify, in a timely manner, risks of a systemic nature and to respond with warnings or targeted policy measures to address them. this was at the centre of my talk, since this is where the esrb will play an important role in safeguarding financial system stability at the eu - wide level. another dimension that will be at the core of this conference today are the prudential measures to increase the resilience of the banking sector over the coming years so as to increase firms ’ ability to withstand shocks and to reduce the overall vulnerability of the system. these include measures of both a micro - prudential and a macro - prudential nature, forming a comprehensive package of capital reforms and the new global liquidity standard. banks loss - absorbing capacity will be reinforced by regulatory capital consisting of common equity and including two capital buffers : the capital conservation buffer and the countercyclical buffer, addressing macro - prudential risk in a time - varying fashion. market risk, counterparty credit risk and securitisation risk rules have also been revised to ensure that risks are adequately captured. to limit model risk and the build - up of excessive leverage on and off the balance sheet