of the euro against the dollar. it ’ s hard to identify the primary cause of the fall in oil prices : the increased supply or the weak demand. it would of course be serious if prices were not pushed down by low demand. cheaper oil supports growth but also threatens to drag inflation expectations down too far. it is a mixed blessing. will the ecb take extra measures to boost growth and inflation? we already further loosened monetary policy in june and september. we do not feel comfortable with the current low level of inflation and are closely monitoring the path of inflation. we have clearly stated, and that is new, that the ecb ’ s balance sheet will increase considerably as a result of these measures. that is necessary because we want to stimulate lending. ecb president mario draghi has given an indication, but that is not an objective in bis central bankers ’ speeches itself. we do not target a specific balance sheet total, but rather inflation over the medium term. are the current measures sufficient? some observers doubt whether the current measures will be enough to bring about the considerable expansion of our balance sheet. we are stating clearly : if we need to counter the risk of a prolonged period of low inflation, the governing council is unanimously prepared to take unconventional measures. the debate on the need for extra measures still lies ahead. what do you think? as always, i will thoroughly analyse the new information. but let there be no doubt : if it is necessary, we will not hesitate. nothing is being ruled out. we have two clear messages : we are planning a significant liquidity injection and we are keeping a close watch on the situation. what can governments do to stimulate growth? germany and france are holding talks on that. monetary policy alone is not enough. a coherent package of measures is required, with contributions from monetary policy, fiscal policy and structural reforms. this combination is not easy. if necessary, we, as the central bank, will not hesitate to do more. but the politicians must also shoulder their responsibilities. they must find the right mix of fiscal policy and structural reforms. france is once again seeking more time to reduce its budget deficit to 3 %. i think that france must do more to restore public finances. but as structural reforms may have a negative effect on growth in the short term, the stability and growth pact allows countries that implement more reforms to extend the deficit reduction programme over a longer period. the problem is that, in the past, many countries have abused that flexibility in

outside its jurisdiction. this takes the form of penalties for societies outside the united states and the prevention of access to the us payment system and is based on the central role played by the us financial system and the us dollar in global trade. several european governments believe that this situation could be mitigated by increasing the international role of the euro. but if markets are to entertain the possibility of an enhanced role for the euro, we need to consider what the conditions are that underpin the dollar ’ s dominance. the list is long, but the fact that the dollar is an expression of an integrated capital market is certainly one of those conditions. [ 34 ] for the eu to meet that condition – which, at this stage of its development, is more achievable than others – would require a complex programme of legislative and institutional harmonisation, which however could be put in place in short order. 6 / 10 bis central bankers'speeches the second reason why an institutional approach can help produce better outcomes is that institutions and their actions can be subject to more clearly defined democratic control. precisely because those institutions are invested with a mandate and defined powers, it is possible to make a more direct link between decisions and responsibility. the eu already has many channels through which its citizens can exercise democratic control, via national authorities in the eu council and members of the european parliament, who hold eu institutions accountable on behalf of the people who elected them. in fact, for the first time on record, a majority of europeans now feel that their voice counts in the eu. it is to be hoped that accountability arrangements to hold eu institutions in check continue to be strengthened, because the perception of the legitimacy of their actions depends on it. the role of the european parliament is vital here. of the institutions with a democratic mandate to exercise control, it is the only one with a european perspective. the european court of justice provides a second avenue of democratic control. its role in ensuring that eu institutions are following their mandates becomes all the more important in the absence of a european government. adherence to the judgments of the ecj is a necessary condition of the rule of law. consistency and uniformity in the interpretation of eu law across 28 member states are the bedrocks of eu law as an effective and autonomous legal order. [ 36 ] a basic function of the law is to stabilise expectations by providing a reliable foundation upon which citizens and companies can organise their activity and plan for the future. [ 37 ] and such predictability and certainty