to strike a balance between two outcomes : it seeks to preserve the incentives for banks to pass through the stimulus generated by the negative interest rate on their reserves, while mitigating the adverse effects that these negative rates might have on banks ’ lending behaviour by affecting their profitability. the euro area needs financial intermediaries to remain engaged and active in 3 / 5 bis central bankers'speeches monetary transmission, and the new two - tier system will make sure that the ability of banks to extend loans to their customers at favourable terms remains unimpaired. the different elements of this comprehensive package will be mutually reinforcing in supporting favourable financing conditions for businesses and households, which will sustain investment and consumption. greater business and household expenditure, in turn, will support inflation dynamics and make sure that they durably converge to our aim. overall, in view of the outlook and uncertainties we are facing, monetary policy needs to remain highly accommodative for a prolonged period of time. the measures we took at our last meeting underscore our determination and readiness to provide the necessary monetary stimulus in pursuit of our price stability objective. we continue to stand ready to adjust all of our instruments if warranted by the inflation outlook. looking back, looking forwards : achievements and future direction of economic and monetary union the conventional and unconventional measures the ecb has taken over the past decade have been successful in addressing the deflationary risks, restoring the functioning of the monetary policy transmission mechanism and providing vital support to the euro area economy. but the ecb does not operate in a vacuum and other economic policies matter too. allow me to recall my first appearance before this committee in 2011. at that time, half of my introductory remarks were about the functioning of economic and monetary union ( emu ) and the need for other european policymakers to act. so i will conclude my final statement to you by highlighting some lessons that have emerged from these eight years, which i hope can help in addressing the challenges ahead. when comparing the crisis response of the euro area with that of other advanced economies, it is evident that the latter were able to achieve a better macroeconomic policy mix at the time, thanks to more decisive actions in both the fiscal and financial domains. the governing council has reiterated that we are determined to ensure that inflation moves towards our aim in a sustained manner, and that we continue to stand ready to adjust all of our instruments. at the same time, a better policy mix, including fiscal policy, structural

mario draghi : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, before the hearing at the committee on economic and monetary affairs of the european parliament, brussels, 23 february 2019. * * * introduction madam chair, honourable members of the economic and monetary affairs committee, ladies and gentlemen, i would like to start by congratulating all of you on your election, and you, madam chair, on your recent appointment as chair of this committee. it is a pleasure to appear before this committee in this new legislative term and before my term as ecb president comes to an end. the legitimacy of the ecb ’ s independence, as enshrined in the eu treaties, crucially relies on our accountability. and the treaties have conferred this parliament with a central role in holding the ecb accountable. hearings before this committee play an essential role here. in my time as president, i have found them to be extremely beneficial. when i appeared before the econ committee for the first time, in december 2011, the euro area was rife with financial instability ; it was falling into a second recession, which eventually led to sustained disinflation and, at times, heightened risks of outright deflation. 1 the euro area has come a long way since the crisis, in part thanks to the support provided by the ecb ’ s monetary policy. the unemployment rate in the euro area was 7. 5 % in july this year, the lowest level since july 2008. over the past years, the ecb has repeatedly and clearly shown its readiness and determination to fulfil the primary objective of achieving price stability, as laid down in the treaties. this readiness and determination has been critical in addressing the economic crisis and the downside risks to our objective. it was with this same determination that, two weeks ago, the ecb ’ s governing council decided to act in response to the continued shortfall of inflation with respect to its aim. i am happy to be able to discuss these decisions with you today. i will first review the main developments in the euro area economy since my last appearance before this committee. i will then present the monetary policy decisions that were taken by the governing council in the light of the economic outlook. as requested by this committee, i will conclude by drawing some lessons from the past eight years that could be relevant when discussing the policy responses to the challenges that lie ahead of us.