policy and in designing certain features of the programme of outright monetary transactions ( omts ), among other areas. we have also argued for greater transparency in the decision - making of the governing council. this is the more important, the greater the central bank ’ s responsibilities and influence become. we have also been active in developing forward guidance for monetary policy. this is not only a variety of transparency ; forward guidance, when used properly, is actually another active policy tool that can be used to increase the effectiveness of monetary policy. i believe, it was a good thing that the governing council adopted more explicit forward guidance last july, when the chairman stated that interest rates would remain at the level prevailing at that time or lower for an extended period of time. this new type of communication provided since last summer has proven effective, as the inflation outlook continued to dampen this autumn. thanks to the context created by forward guidance, we could implement the necessary lowering of interest rates at our meeting of 7 november as a consistent part of the ecb ’ s accommodative monetary policy geared towards price stability. forward guidance will retain its role in the future, too. the euro area economy will take time to recover. moreover, in the context of globally integrated financial markets, any divergence in economic activity between europe and the united states will increase the challenges for the communication of monetary policy. although the exit from central banks ’ non - standard measures and the normalisation of interest rate levels are currently only on the distant horizon, the experiences of last summer show that the approach of the turning point and related speculation could cause turbulence on the markets. central banks will need to be able to respond to such developments with precise communication. following the latest interest rate decision, the euro area policy rate has already been brought very close to zero. this does not, however, mean that the ecb ’ s room for manoeuvre in monetary policy or the tools at its disposal have been exhausted. experience has shown that, where the situation so demands, we can count upon the capacity of the eurosystem to find solutions. however, the division of responsibilities between the central bank and other actors must be clear, in order to avoid the central bank becoming subject to expectations that it can neither fulfil nor should be responsible for fulfilling. bis central bankers ’ speeches

the early stages of the crisis and their decisive actions as the crisis continued were mainly due to the experiences of the 1930s. a key role in formulating monetary policy in 2008 and the years that followed was played by the chairman of the federal reserve board, ben bernanke, who before his career as a central banker specialised in research on the great depression of that decade. bernanke ’ s leadership was of major importance in preventing the total collapse of the financial system. without his vision of the reasons behind the great depression of the 1930s, formed during his career as a researcher, the fed ’ s response would probably have been much slower and more timid. already before bernanke ’ s work, research had begun to emphasise the role of monetary policy errors in deepening the 1930s ’ depression. the key publication was the famous “ a monetary history of the united states, 1867 - 1960 ” by milton friedman and anna schwartz, published in 1963. the book claimed that the severity of the great depression was due to the fact that, following the onset of the crisis, monetary policy, particularly in the united states, was too tight and allowed a steep decline in the stock of money. friedman argued that the fed ’ s failure was due particularly to its collateral requirements, ie the fact that it held to the “ real bills ” doctrine. according to this doctrine, the central bank issued credit only against notes, drafts and bills of exchange arising from actual commercial transactions. such securities were not available in sufficient amounts following the onset of the recession in the ’ 30s, and so the fed could not increase its lending. according to friedman, the fed should have used extensive purchases of government securities ( open market operations ) to prevent a decline in the stock of money, but this was prevented by the real bills doctrine. this resulted in a fall in the money stock, a collapse in aggregate demand and a deflationary spiral. ben bernanke published his first research papers on the 1930s ’ depression already in the early 1980s ( “ nonmonetary effects of the financial crisis in the propagation of the great depression ”, american economic review, 1983 ). bernanke ’ s research emphasised that the depth of the great depression cannot be explained only by monetary aspects ( interest rate level and amount of money ), but was mainly due to the banking crisis. banks were not helped, and their mass failure led to a collapse in the availability of credit. in the united states, approximately half of the banks