the most important non - standard measures are the fixed rate full allotment procedures and the longer - term refinancing operations. we have also implemented three additional us dollar operations, which cover the end of the year, and we have launched a second covered bond purchasing programme. let me use this occasion to dwell a bit further on monetary policy in the current environment. three principles are of the essence : continuity, consistency and credibility. continuity first and foremost refers to our primary objective of maintaining price stability over the medium term. bis central bankers ’ speeches consistency means to act in line with our primary objective and with our strategy both in time and over time. credibility implies that our monetary policy is successful in anchoring inflation expectations over the medium and longer term. this is the major contribution we can make in support of sustainable growth, employment creation and financial stability. and we are making this contribution in full independence. gaining credibility is a long and laborious process. maintaining it is a permanent challenge. but losing credibility can happen quickly – and history shows that regaining it has huge economic and social costs. these three principles – continuity, consistency and credibility – are at the root of the governing council ’ s outstanding record during the past 13 years in terms of price stability and anchoring inflation expectations. national economic policies are equally responsible for restoring and maintaining financial stability. solid public finances and structural reforms – which lay the basis for competitiveness, sustainable growth and job creation – are two of the essential elements. but in the euro area there is a third essential element for financial stability and that must be rooted in a much more robust economic governance of the union going forward. in the first place now, it implies the urgent implementation of the european council and summit decisions. we are more than one and a half years after the summit that launched the efsf as part of a financial support package amounting to 750 billion euros or one trillion dollars ; we are four months after the summit that decided to make the full efsf guarantee volume available ; and we are four weeks after the summit that agreed on leveraging of the resources by a factor of up to four or five and that declared the efsf would be fully operational and that all its tools will be used in an effective way to ensure financial stability in the euro area. where is the implementation of these long - standing decisions? ii. the shift towards a much greater role of emerging economies let me now turn to the “ big shift ” in the global economy that is

cross - border capital flows, such as sudden stops in capital movements, have proven to be persistent rather than short - lived. more analytical reflection on what has made such shocks persistent, and how this can be addressed at a deeper structural level would therefore be welcome. today, there are many signs that political support for international financial integration has weakened in domestic constituencies, and we are witnessing an increased fragmentation of capital markets at a global and at a regional level3. this should not be accepted, because we would then lose the benefits of financial integration. financial markets, if properly regulated, should regain a key role in allocating resources and sending price signals to individual players and policymakers. third, an interconnected financial system requires a very high level of harmonisation of financial regulation and cooperation among financial markets and banking supervisors, both at the international and at the regional level. in the euro area, the ecb has argued in favour of a single regime for bank resolution and, down the road, in favour of a single european institution in charge of insuring deposits and winding down failed banks. if one wishes to reap the benefits of financial integration while delivering financial stability, one must be willing to give up at least partially national autonomy in financial regulation. fourth, one should take into account what maurice obstfeld has named the fiscal dimension of international liquidity4 : expanded international lending facilities, including an expanded imf or a stronger european framework, cannot remain unconditionally solvent in the absence of an expanded level of fiscal backup. global financial safety nets should be backed by sounder fiscal fundamentals in all major economic areas. i will now conclude. global financial safety nets have been successfully strengthened under the korean and french g - 20 presidencies, and there is room for further improvement. but measures aimed at addressing liquidity crises should remain temporary, and they should not weaken the incentives to address financial market malfunctioning in a more durable manner. even more importantly, safety nets are there only to address unexpected events. it is the duty of policymakers to take preventive action against expected disorderly outcomes, such as those resulting from current account and fiscal imbalances. thank you for your attention. see “ financial integration in europe ”, ecb, frankfurt am main, april 2012. see obstfeld, m. “ international liquidity : the fiscal dimension ”, nber wp no. 17379, september 2011. bis central bankers ’ speeches