are still somewhat below our 2 percent objective. but, even here, i think there has been progress. despite the strengthening of the dollar and the decline in energy prices, core pce inflation has been quite stable over the past year – currently running at around 1. 6 percent. that is not a tremendous difference from our 2 percent objective. so why has the united states done a bit better compared to europe and japan in terms of achieving our monetary policy objectives. i think there are a number of contributing factors. first, u. s. household balance sheet repair occurred relatively quickly. this is in part because the housing foreclosure process wiped out many mortgage debts. part was accomplished by a long period of very slow household debt growth. and part was accomplished by the sharp fall in interest rates that helped cut debt servicing costs. second, in the u. s., the banking system was recapitalized and deleveraging occurred quite quickly following the financial crisis. capital from the troubled asset relief program, or tarp, was put into the large banks and soon many of them replaced this tarp capital by raising new equity. the scap stress test in 2009, and the annual ccar stress tests that followed, worked to constrain the rate of bank capital distributions and, thereby, helped to build up bank capital ratios. and, u. s. banks worked hard to clean up their balance sheets. poor assets were managed down or run off, and underwriting standards were tightened. third, the federal reserve was particularly aggressive early on in its pursuit of monetary policy accommodation in order to keep inflation expectations well - anchored. this is a necessary condition, in my view, to maintain the efficacy of monetary policy. if inflation expectations were to get unmoored to the downside, then it becomes more difficult to pursue a stimulative monetary policy. could things have been done differently in the u. s. in such a way that would have led to better outcomes? absolutely. with the benefit of hindsight, we could have and should have been even more aggressive on the monetary policy side. while we made progress with some of the innovations on monetary policy that we eventually introduced – such as the openended purchase of $ 85 billion of treasury and mbs securities per month – it would have been better if we had done this sooner. there is a lot as well that is outside the fed ’ s purview that could have been done to make the u. s.

has been much weaker. the need for further efforts in this direction is fully recognised by many institutions, including the ecb, and is at the heart of the european union's initiative to create a truly integrated market for financial services. the vicepresident will address this issue tomorrow in his summing - up. the second ecb central banking conference is structured very much like the first one. today and tomorrow, there will be three sessions covering a number of issues related to the general theme of this conference, and based on research papers and contributions from discussants. a policy panel will follow these sessions. the first session will deal with developments in european banking. the paper by jean dermine takes a look at how the european banking system has changed since the treaty of rome in 1957. it then asks a provocative question : how " real " is the single banking licence? the second session, tomorrow morning, will address the changing character of european finance, and in particular consider to what extent europe is shifting from bank financing to market financing. in their paper, luigi zingales and raghu rajan will assess recent developments in this respect, and impediments to a further shift to a more market - based financial system. our speaker in the third session, jean - pierre danthine, will illustrate the benefits from the discipline that economic theory can impose on our thinking when analysing european equity market integration. he will also present a generalised approach to estimating the importance of country and sector effects in portfolio allocations. one of his discussants, bruce carnegie - brown, will draw on his experience as a market expert to interpret for us recent developments in bond markets. finally, as already mentioned, the policy panel, which will be the final session of the conference, will discuss the role of central banks in the maintenance of financial stability against the background of the transformation of the european financial system. i am particularly pleased to see that we have been able to bring together such highly esteemed policy - makers and academics for this purpose. ladies and gentlemen, i should like to finish at this point and hand over to our first speaker. i sincerely thank you again for coming here today. i wish you a very interesting and stimulating discussion, and i look forward to hearing about the results of the second ecb central banking conference.