##rage. this cannot be our goal, and we need to resist any temptation of doing so. when all is said and done, we all have the same objective : a stable financial system – of course at the national level, but it is equally important at the global level. what we have learned in the recent years is that financial distress doesn ’ t stop at national borders. in the euro zone we have experienced the hard way that instabilities even in small member states have the potential to put the continuance of the entire european monetary union at risk. i would like, if i may, to say a few words about yesterday ’ s decision by the ecb governing council. first things first : the eurosystem staff macroeconomic projections presented give no cause for concern over the development of the euro - area economy. in fact, they confirm the view that the steep drop in energy prices is supporting the recovery of the euro area ’ s economy. the lower energy prices also go a long way towards explaining the expected evolution of consumer price inflation. it ’ s clear that inflation as forecast by the eurosystem staff will fall short of the governing council ’ s price stability target not only in 2016 but probably into 2017 as well. that ’ s not something we should simply brush aside. but given the predominant role which the drop in energy prices plays in euro - area inflation and the extensive monetary policy measures that have already been taken – which can entail risks and side - effects of their own – i am not really convinced that a further easing of monetary conditions was necessary. 5. conclusion ladies and gentlemen, since the beginning of the financial crisis, regulators have done a lot of work and thereby followed the instruction given by theodore roosevelt. do you remember? – “ in any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing. ” and i believe doing nothing and expecting the markets to recover on their own would not have been an option. i am sure that the financial system is now safer and more resilient than it was before lehman collapsed. i do not deny that stricter regulation may translate into higher costs for banks. bis central bankers ’ speeches however, when measured against the burden that financial crises place on society, i consider these costs to be very much justified. the post - crisis reforms are in large part finished, but some regulatory projects remain on the agenda. i strongly

do act as intermediaries in the transactions, but it is the behaviour of the ultimate seller that matters for the economic impact. bis central bankers ’ speeches the upbeat retail sales figures announced at the end of last week may be a sign this is already starting to happen. but while growth should gradually strengthen, the continuing headwinds from the unwinding of excessive debt and the government ’ s continuing fiscal consolidation mean that the pace of recovery is likely to remain moderate by historical standards. as a consequence, a margin of unused capacity and labour in the economy is likely to persist for some while yet, helping to ensure that domestically generated inflation – presently running around 1½ %, depending on exactly how one chooses to measure it – should stay subdued. indeed, in the absence of the extra £50 billion of gilt purchases announced two weeks ago, we judged that inflation would be rather more likely than not to undershoot our 2 % target in the medium term. that was why we decided that it was necessary to do more. moreover, the longer capacity lies idle, the more likely it is to be scrapped completely. and the longer people are out of work, the more likely they are to become disconnected from the labour market altogether. so there is an added incentive to getting the recovery back on track quickly. the euro area represents the biggest single downside risk to this picture. greece is the country in the headlines right now, but several countries of the euro - area periphery face, in varying degrees, a challenging mixture of unsustainably high public and / or private indebtedness and weak competitiveness. correcting those problems requires : fiscal consolidation ; bank recapitalisation ; and a rebalancing of demand towards net exports. the first two are under way, but the third is harder to achieve in a monetary union where no exchange rate movement is possible to bring about the necessary improvement in international competitiveness. at best, these countries face an extended period of very low growth while the necessary adjustments take place. and while this morning ’ s agreement between the greek government and the euro - area authorities is certainly welcome, there still remains a possibility that events could unfold in a disorderly and damaging fashion at some stage in the future. the linkages to the united kingdom from such a disorderly outcome would be threefold. first, and most obviously, almost half our exports go the euro area, so weak growth there has a rather direct spillover on to us. second