even into negative territory. at face value, such estimates are consistent with the secular stagnation hypothesis. but as policymakers, can we really base our actions on such an intangible variable? my answer is no. this is why the ecb has always followed a comprehensive monetary policy strategy, based on two pillars, and has in practice always looked at a broad range of indicators to assess its monetary policy stance. second, policy instruments. proponents of the secular stagnation hypothesis typically argue that a low equilibrium real interest rate makes monetary policy ineffective, since interest rates cannot fall low enough to absorb the excess of saving over investment. and though several central banks have shown the zero lower bound is not, in fact, a constraint to the interest rate instrument, there is an effective lower bound on interest rates, which is probably not too far from zero. so does that mean central banks have reached the limit of their actions? again my answer is no. instead we have used non - standard measures to flatten the term structure of interest rates and lower financing costs in the economy directly. and the ongoing economic recovery is testament to their effectiveness. what this shows is that theoretical constraints can be lifted in practice, because the economy is much more complex than models can capture. third, the relationship of monetary policy with other policy areas. this is the thorniest issue. there is always a risk for a central bank of becoming the only game in town, even though large parts of the growth challenge are clearly beyond its remit. the drivers of long - term growth are innovation, technology diffusion, which is to say, productivity growth. to manage this risk, central banks should always staunchly stick to their mandate. this is the only way for them to do their part effectively while ensuring that the overall policy response remains comprehensive, consistent, well - sequenced and incentives - compatible. 1 this is the full text of remarks delivered in an abridged form in paris on 16 january 2017. 2 / 2 bis central bankers'speeches

jean - claude trichet : how to better protect the euro area against financial instability – interview in la stampa interview with mr jean - claude trichet, president of the european central bank, in la stampa, italy, conducted by mr stefano lepri, 14 october 2010. * * * mr president, is the crisis of the euro over? i interpret your question as applying more to financial stability in the euro area than to the euro itself. i do not think there has been a crisis. the euro is the single currency of 330 million people and enjoys a high degree of confidence among investors and savers because it has delivered price stability remarkably well over the last 11½ years. what we had was a situation in which a number of countries had not respected the stability and growth pact. these countries have now engaged in policies of fiscal retrenchment that were overdue. they have to implement vigorously these policies which are decisive for the preservation and consolidation of financial stability in europe. but, from now on, the rules must be strengthened. it was necessary to fully respect the letter and the spirit of the stability and growth pact. we have made that point constantly over the last years. on top of that, the governing council of the ecb – with mario draghi, the governor of the banca d ’ italia – calls for a “ quantum leap ” – a very, very significant improvement – as regards fiscal surveillance inside the euro area. we must also engage in surveillance of monopolies and, in particular, of relative competitiveness and of current account imbalances. to that end, we must exploit the possibility of secondary legislation under the current treaties to the maximum extent possible. even by imposing automatic sanctions? france, italy and some other countries would prefer not to. for us, the proposals of the european commission move in the right direction. but more ambitious reforms are needed. with the benefit of hindsight we know now that it is very important to engage in quasi - automatic sanctions, and with an accelerated procedure, with the countries that break the rules. if we want the euro area to better protect itself against financial instability, room for discretion in applying the rules must be reduced. sanctions must be possible in the early stages of macroeconomic surveillance. if this is not a common, it is a collective economic policy. but is it necessary to add a new rule on debt levels? in italy some are afraid a swift debt reduction – 2. 75 points each year in our case