underlie our views on the right policy mix for the euro area. we take monetary policy decisions with a view to attaining our primary objective of price stability. thereby, we establish a stable nominal anchor for the private sector, which in turn is a fundamental precondition for overall macroeconomic stability. without prejudice to this objective, we take financial stability risk seriously and monitor closely whether severe imbalances are emerging in the financial sector. in this context, we consider the financial stability risks related to our policy measures to be contained. should risks emerge, macro - prudential policy is best suited to safeguard financial stability. macroprudential instruments can be targeted more efficiently to those sectors and countries where systemic risks may be materialising 13. finally, we encourage national authorities to do whatever is in their power to place the euro area on a more dynamic growth path, thereby creating attractive investment projects that generate high, but fundamentally justified, returns. these are the conditions for unconventional monetary policies to bring economies back to a stable and sustainable growth path, both at home and abroad. “ reinforcing financial stability in the euro area ”, speech given by vitor constancio, vice - president of the ecb, at the omfif city lecture, london, 8 may 2015. bis central bankers ’ speeches bis central bankers ’ speeches

cycle and regain monetary independence, provided that they show clarity in purpose and resolve in implementation. for emerging markets and smaller advanced economies, there is also evidence that while the global financial cycle has indeed been a dominant factor for the last two decades, the arrangement of open macro policies such as the exchange rate regime and financial openness still have direct influence on sensitivity to the financial cycle 2. explaining the difference in this respect between large advanced economies and emes would take us far beyond today ’ s discussion. let me only suggest that the existence of deep, diversified local currency denominated capital markets makes a crucial difference to help decouple from the global financial cycle. this incidentally suggests that capital market union as it is currently planned in europe, on top of its allocative benefits, can help strengthen our economic and monetary independence. the global exchange rate adjustments should be therefore seen as a natural by - product of such move towards monetary policy independence and divergence. while the exchange rate is not a policy target for the ecb, it is nonetheless important for growth and price stability. also, the exchange rate movements we have seen over the past few months are not unprecedented relative to the experiences of other major central banks with regards to announcements of quantitative easing policies ( such as qe2 and qe3 in the united states and qqe in japan, as well as the bank of england ’ s apf ). 3 this notwithstanding, global policymakers need to be mindful that global monetary policy divergence can also lead to some tensions that are due to global monetary policy spillovers. many discussions in the context of global monetary divergence have centred on the issue of monetary policy spillovers and the exposure of emerging market economies to volatile capital flows. yet, as i have argued elsewhere 4, there is no broad international consensus on the size and persistence of such spillovers. 5 more generally, there is little evidence that capital flows to emerging markets have been excessively volatile over most recent years, contrary to what is often claimed. they have been strong since the global financial crisis, decreased somewhat see aizenman, j., chinn m. and ito. h, ( 2015 ) “ monetary policy spillovers and the trilemma in the new normal : periphery country sensitivity to core country conditions ”, nber working paper no. 21128, april 2015. qe 1 which was implemented at the height of the financial crisis was followed by a sharp appreciation of the us dollar. similarly,