 yn y policy panel, is to discuss what all of what we've been discussing for the past couple of days means for monetary policy to translate it into policy. And I think broadly to news a little bit on the world facing central bankers today, the environment of low growth, low inflation, high unemployment and what this means and what we might do. And I wanted to really try and cover, I hope, three broad topics. The first is to explore a little more the relationship between monetary policy and structural reform, something we've discussed a lot, but also fiscal policy. Secondly, to look a little bit at what the consequences of today's environment of a commentative monetary policy are, particularly two areas that are sometimes controversial. One, the impact on distribution and secondly, the trade-off if there is one with price stability and financial stability. And thirdly, before we go to questions, to stand back a little and news about where we are in the world of central banking in terms of whether there's been a paradigm shift or if there hasn't whether there needs to be one. So, to have that conversation, there is frankly no better cast of three people. Thank you all very much for joining us. And Harry Cogoroda, I was going to start with you. The question of what is the optimal co-ordination between monetary policy, fiscal policy and structural reform is something that you have clearly been grappling with because the three arrows of arbenomics are precisely those three policy levers. You've had two years' experience of it. How important is structural policy, how important is fiscal policy and how much is it really up to you as the central bank? Thank you for raising a very important question. Before going into arbenomics and structural reform and so on and so forth, let me speak a little bit about inflation and unemployment in Japan. For the Bank of Japan, employment is not explicitly included in its monetary policy mandate, unlike in the Federal Reserve. However, unemployment is still a very useful guide for us in pursuing price stability. Also, it is widely recognised that price stability must be secured because it is indispensable for the health of the economy, which of course has a direct impact on workers. So, despite some seeming differences in the mandates written in their respective statutes, there is little practical difference between major central banks across jurisdictions. Nevertheless, there are remarkable differences between the US, the Euroy area and Japan in their historical observations of unemployment and inflation. If you look at the chart, a graph, a simple graph, a scattered diagram showing unemployment and inflation for these three jurisdictions. The horizontal axis is an employment rate, the vertical one is inflation rate. There are two approaches regarding how to interpret this graph. One approach is to focus on where each cluster of dots is located. There is a well-known measure of welfare, the misery index, which is a simple sum of unemployment rate and inflation rate. If misery index is indeed the most accurate measure of welfare, the further north-east an economy is located, the more miserable the state of that economy. In this interpretation, Japan's performance has been consistently outstanding for many years with the lowest unemployment rate and lowest inflation among the three. However, the misery index is an indicator that makes sense only in a high inflation environment, which has not been the case in major economies for the last few decades. Therefore, misery index would not, in fact, give us any useful hints in evaluating the monetary policies of major central banks. The other approach is to interpret the clusters as each jurisdiction's Phillips curve, where the underlying theory is that inflation dynamics can be explained in the context of slacking in the labor market. As a matter of fact, this simple graph appears to suggest that Phillips curves for the US and the Euro area have very sloped, if at all, since the middle of the 1990s. One important aspect is that both flat curves are located at around 2% inflation. In other words, the inflation rate has been mostly stable around 2%, irrespective of noticeable ups and downs in unemployment. Inflation has been well anchored at the level intended by the respective central banks in the US and the Euro area. On the other hand, Japan's Phillips curve is unique in two points. First, the negative correlation between unemployment and inflation is more apparent in Japan. Second, and more importantly, the curve crosses the zero inflation line with a larger part of it remaining in negative territory. This suggests that long-term inflation expectations in Japan has been around zero or even slightly negative for nearly two decades since the mid-1990s. This is exactly the problem with the Bank of Japan decided to address decisively a little over two years ago through quantitative and qualitative monetary easing. Our intention was to hold, first, to stimulate the economy throughout various transmission channels and thereby move the economy and inflation in the northwest direction along our moderately but still meaningfully sloped Phillips curve. And second, to create higher inflation expectations. Can I interrupt you there? I'm sorry because we haven't got that much time. Yeah, yeah, of course. Thank you. And so what this simple curve shows, the situation surrounding unemployment, inflation, nexus is quite different. That means that economic structures or the macroeconomic history is quite different. And so that in the Japanese case, the first and foremost the Bank of Japan is trying is to move towards the left or northwest. And by so doing also inflation expectations be raised and the Phillips curve itself should shift upward. That's, I can see that's the challenge of the Bank of Japan crisis. Could you just put that into the context of what do you think the role of structural form has been? Because that's been very much the subject of this conference. Has it been important in Japan's case or is that really a European phenomenon? I think for the Japanese economy structural reform or structural changes are quite important because we suffered from demographic owners or demographic problem in the last couple of decades. Population has been declining and that made the medium-term growth potential lower and lower. And that created a lot of problems. But what I would like to emphasize is on the one hand, structural reforms to raise medium-term growth potential is quite important and vital. But on the other hand, monetary policy must address deflation, which is basically monetary phenomena. And the eradicating deflation is absolutely necessary and also could make structural reforms even less painful because if you have deflation and high unemployment and so on and so forth, then structural reforms, which could be quite painful in some sectors, at least in the short run, could be very difficult to be implemented. But if your economy grows with 2 percent or so inflation rate, then even serious and severe structural reforms may be accepted by the general public. In that sense, in that indirect sense, monetary policy may also contribute but may help structural reform be implemented vigorously. So it's an indirect relationship. Structural reform is not something that you hear very much from Fed Governors. What is your sense of what the relationship is between what is appropriate for central bankers? How should central bankers think about structural reforms and what should they say about them? Well, I think they should think about them in the context of what is the expected growth rate of the economy. And the other side of it is that in the United States, I think the most important thing relative to monetary policy done by the government on the structural side is the Dodd-Frank Act, which is a very massive huge change in the structure, likely to produce a big change in the structure of the financial sector and very important for financial stability going ahead. And that was done very quickly. The other negative aspect on structural reform is the issue that has been emphasized a lot in this conference, which is infrastructure investment. And that, we heard yesterday an emphasis on this is a good time to do it. The interest rate is very low, et cetera. But there is general agreement that United States infrastructure, public infrastructure, could do with a lot of investment and you just need to go on trains in Europe or the United States to figure that out. Or airports, the whole transportation infrastructure is part of that. That's the part that hasn't been done and it looks like it's not going to be done in the near future. So there we just take that as given. There's nothing we can do about it. We would much prefer that there was an active infrastructure investment, public infrastructure program, but it isn't happening. And there's the general issue of what do we say about things that aren't under our control, but that matter from the viewpoint of the economy. And the answer is you can talk about it from time to time, but you can't make this your main talking point every time you meet the press. I used to say when I was in the IMF, if you want a good critique of monetary policy, go to the finance ministry. If you want a good critique of financial, of budgetary policy, go to the central bank. We don't want to be like that. And we try not to be, but the temptation is there, but we resist it. So, Maria Draghi, you spoke very eloquently about the importance of structural reform. Yesterday, you said it was necessary for the economy's resilience and obviously also to boost growth. I guess it was what, almost a year ago at Jackson Hole, you spoke also about things other than monetary policy, but you emphasized fiscal policy. And so I'm wondering in the realm of things that are not immediately under the control of a central banker, how do you think about fiscal policy versus or in addition to structural reform, which is more important? Well, let me first make a more general point. I mean, I can't resist, I can't resist responding to this cries for democratic legitimacy or actually lack of it when central bank governors speak about structural reforms, no policies, it's less toxic. Now, let's, I was trying to think when there were other cases when central bank governors have spoken in the past about things that were not exactly under their control. And one example that came to mind is when they were speaking against explosive wage indexation mechanisms in the 70s. Another case that came to mind is when they spoke against fiscal excesses in the 80s and the 90s. And another more recent case is when famous words were said during the Euro crisis in August 2012. In all these cases, there were cries and huge loud protestations that we were acting and speaking outside our mandate. On the contrary, in the early 2000, 2002, 2003 and 2004, we all wished central bank governors had spoken more against the destruction of the financial regulation which preceded the crisis in some major jurisdictions. And unfortunately, they did not because the general conviction at the time was that financial stability would not fall squarely in a central bank mandate. Now, of course, we changed minds since then. So you see that when you put these things in historical perspective, you start really thinking whether central bank governors shouldn't be, especially independent central bank governors, shouldn't be quite clear about speaking about things, policies or lack of policies that hamper their mandate, that made their mandate more difficult or even impossible. And I think they should. So that's a general point. Actually, I will get to fiscal in a second, but I can't resist following up on that because you mentioned yesterday it's not as though you're simply advising on things that will generally improve the economy. You made the argument that the structural reforms can have an impact on monetary policy, particularly when you're close to the zero lower bound. So is it that you feel the need, the desire to discuss this because it is impacting monetary policy or because you feel the responsibility to tell policy makers about how to make the economy better? No, it's really, first of all, the first reason is certainly true. And as I explained yesterday, it does impact on our monetary policy instruments. There's also a second reason which makes the pursuit of the achievement of price stability much, much more difficult. I think Larry put it wonderfully yesterday. Given that our monetary policy stance is perfectly appropriate and if need be, we do more than that. But in a situation where you either have secular stagnation or you have a very dominant structural component, the monetary policy, as he said, doesn't have many attractive options. If it pursues full employment or price stability risk to create financial instability or financial stability risk, if it pursues financial stability, it would come a detriment of price stability or other objectives. So there must be other policies really that respond to these situations. Now in our situation, it's a combination of cyclical and structural. So I'm now addressing my remarks to the structural component. And there are two policies, two set of policies that come to mind. One is the demand policy, namely fiscal policy. Another one is structural policies. Now in Jacksonville I argued for fiscal policy looking at addressing the issue of an aggregate fiscal stance for the Euro area. And I think a case can be done, can be made for that. But it should be very, very carefully specified. Because if we go back to pre-crisis times, you see that in most countries in the Euro area, you see what sort of fiscal policies they had run. Current government expenditures increased significantly, and they were financed by raising taxes, by debt issuants, and by cutting public investment. So that's exactly what you don't want to see today. So you don't want to raise taxes, cut public investment, so raise current expenditures. So you can make a case for a targeted, well-designed, what we call growth-friendly fiscal expansion. But certainly today and yesterday were devoted to see what sort of lack of structural policies we have to address, and we listed many of them. By the way, I was quite explicit that I don't want to start with dismantling labour protection. There are many other structural policies here. Clearly there is a strong case for sequencing them in the right, and many, many deep thoughtful remarks have been made as far as the sequencing and structural reforms is concerned, the timing, and the credibility. Because, for example, if you reform the pension system and you change mind every year, you don't get any short-term benefit because the expectation of a higher permanent income isn't there. And so, credibility, timing, sequencing. Harika Coror, did you agree with Maria Draghi? Do you think that it is both appropriate and necessary for you to get involved in discussions about fiscal policy and structural policy? And have you done so in Japan? Tell us about how that works in Japan. Yes, two things. One, in Japan, as you may know, two and a half years ago, the government and the Bank of Japan agreed to a set of economic policies, and they issued the so-called joint statement in which the Bank of Japan committed itself to achieve the 2% inflation target at the earliest possible time. On the other hand, the government committed two things. One, in the short run, the government would provide the fiscal stimulus, but in the medium to long run, it would consolidate the fiscal position in a timely manner. And second, of course, various structural reforms, deregurations and so on and so forth to raise medium-term potential growth. So, this is not the if you do, then I will do or if you don't, we don't. That kind of thing, it is not. It is simply a statement of division of labour. The Bank of Japan would achieve the first 2% price stability target irrespective of government policies. And the government, hopefully irrespective of Bank of Japan's monetary policy, they would do fiscal consolidation and structural reforms. But this joint statement provided me to fairly freely speak about structural reforms, fiscal consolidation, and, for instance, in the area of structural reform, I strongly argue that women and foreigners should contribute more to the Japanese economic growth and so on and so forth. And also corporate governance must be substantially improved and so forth. So, I think this joint statement provided a framework for not just mutual understanding, but mutual criticism or argumentation. In the spirit of constructive mutual criticism, have they done enough? I think something has been done, but more must be done. Thank you. Let's turn to the second topic. On a point. There are interesting questions on structural work. We have all of us large research departments, very good researchers. They start working on a topic relating to growth. It will have a lot to say about government policies in other areas. We try to preserve that freedom of expression by saying these are the views of the staff and so forth. They always get published. A Federal Reserve paper says and no subtlety about it, but I think you have to let that happen. Secondly, on talking about macro, I think it's perfectly okay to talk about macro, about the size of the budget deficit, about its consequences, the things that Mario mentioned. I would avoid talking about the allocation of government spending that reflects the tastes of the government or the preferences of the government to the extent you can. We're interested in growth. That's a legitimate aim of ours. We can, I think, mention, say, infrastructure investment, education, et cetera, as deserving of government support. I would never venture to discuss whether the defense budget is adequate for the needs of the nation, although that certainly will have a big influence on fiscal policy. That's not really anything we have anything useful. I have anything useful to say about. Within the area of structural reform, is it appropriate for you to venture what kinds of structural reforms make sense or are better and not so good? As you know, a very lively discussion this morning about whether, you've stayed very timing and composition and so forth, but how detailed should central bankers get? Stan? I don't think we should be detailed about things if we don't have evidence or empirical research on it. You have a huge research staff. Yes, but you also would like them to have done work in the relevant area before you go out and experience. Once they've done work, should central bankers, Mario? I gave you a question. I think this exchange shows what's the difference between US and Europe. In Europe, the structural component of the low growth is much bigger, as all the data and the discussions have shown yesterday. That's why the need to, by the way, central banks, ECBs, doesn't want to be intrusive, doesn't want to tell people exactly governments exactly what to do, how to sequence, who does what and so on. It's very much a policy appeal to action. For example, yesterday there was discussion on whether it makes sense to postpone a reform that you know it's good, two times when the world will be a better place to leave it. Now, it's clear that from the other parts of the discussion, there is not going to be any better moment for doing the right reform than now. It was quite clear. Of course, as I said, this is the major problem in Europe. It hampers the mandate of the central bank. It makes it more difficult. It does affect the monetary policy in various ways that we've discussed yesterday. So we want to make this quite clear at the same time. We don't want to be intrusive because we are aware that we enter into a... I mean, I made all the examples before, wage indexation, excess fiscal deficits and so on. Sorry to press this, but within structural reforms, you say you make the appeal for doing it. There's no better time than now. As you said yesterday and as many people said this morning, there are different short-term and long-term effects from different kinds of structure. Should you be product market? Should it be labour market? If so, which sort? If you don't get into that detail, you're just saying motherhood and apple pie. Structural reform is great. No, because there is a lot of work done by people also who are in this room that have shown what the right sequence is and certainly product reforms, services reforms in Europe, the application of the full application of the single market legislation should be the first priority. Let's turn to another controversial subject, which is the consequence of the commentative monetary policy, particularly unconventional measures, in two areas. Firstly, distributional and secondly, on financial stability. Stan, all monetary policy has distributional consequences. Is there something special about unconventional monetary policy and something more disturbing in its distributional consequences? Well, what you say about all monetary policy having distributional consequences is correct. When we raise the interest rate, we certainly affect the housing sector more than most other sectors or investment more than most others and that's generally true. But it's been around for so long that everybody thinks it's perfectly normal and perfectly neutral and that's sort of accepted. Now, quantitative easing is unusual. It looks like magic to many people. It looks like bad magic to a lot of people and the question is how do you explain it and what are the adverse consequences is no question that the zero interest rates affect savers more than it affects people who are not yet at that stage of their lives and we have to recognize that. We have to make the case that what is being done for the economy as a whole is outweighs that particular effect and the broader case is getting the economy back to growth and we don't have a lot of methods other than fiscal expansion and monetary expansion to do it. Getting the economy back to growth is what will really make a difference to the future of savers and so forth. But you have to keep making the case. We had a discussion yesterday about how we central bankers should be more willing to accept criticism and that we can't expect to make criticisms and not be subject to them. Well, I haven't noticed that we in the Fed at least are not subject to criticism. In fact, I read it every morning. I get a particular newspaper which seems to be devoted to this topic but I can't continue, I'm sure. Mario, you've spoken about this before, the relationship of the distributional consequences and how one should think about them. Is there a macroeconomic rationale for being concerned about income inequality? Well, the silly is, first, second, I agree with Stan about the consequences of low interest rates on savers. They are very, very significant in the euro area. Also what he said about the best case for that is to go back to decent growth, good growth. But also let me add in this vein that the major source of inequality is unemployment. So what we do about decreasing unemployment is the best response to inequality. So if the monetary policy, if QE will actually achieve its objectives of, we say, reaching price stability or in another language lower in unemployment rate, that's the best response to the criticisms that say that QE causes or at least to the consequence of monetary policy on inequality. And is it a difference in kind or just in degree with the distributional consequences of just lowering and raising short-term interest rates? Sorry, what do you mean? Is the distributional impact of unconventional policies simply the same kind of mechanism as you have if you lower or raise the short-term interest rate, or is the mechanism and the scale sufficiently different that you need to think about it differently? Yeah, they're different. They're different in kind, different in quantity, different, they are movements, shifts in asset prices that are different from simple, from the movements we used to have with simple movements of interest rates, no doubt, and also in size. And obviously you have a, you have a series of consequences on wealth distribution as well when you move asset prices, so but the, I think the best, and that's why in a sense one of the reasons why I was insisting so much on structural policies yesterday, that is exactly what we want to leave is the situation where we are, we have to implement policies that we know are going to be the right response, but we also are aware of the, of the, of the consequence they have on other, on other fronts, like one is distribution, there are others of course. The other consequence that people worry about is the impact on financial stability. Harohiko, is there a trade-off there between what you need to do to end deflation and get price stability and the impact it has on asset prices? Are you creating the risks of too much financial instability? I think there is such a possibility in theory, but as far as current Japanese situation concern, we don't see such sort of trade-off or difficult situation because every time when monetary policy board meet, it discusses not just economic and inflation situation, but also financial market, financial institutions, soundness of the financial sector, the whole and so on, so forth. And so far we have not found any sort of financial excess. It may be a bit unique because really nowadays we frequently talk about the gap between risk taking or lack of risk taking in the real economy and increasing risk taking in the financial sector, the gap and so on. But in the case of Japan, the financial sector is also not taking much risk. So at this stage such a trade-off inconsistency is only a theoretical possibility. Stan, is it only a theoretical possibility in the US or is it a becoming an increasingly real risk? I think so far it's mainly theoretical. The places where it's really shown up has been in countries where the financial system was not much affected by the crisis. You didn't see a lot of financial sector restructuring needed after Lehman Brothers and interest rates had to be reduced for international reasons. And then there was very cheap financing of housing. And almost every country whose financial system stayed intact has had a problem with high housing prices, high and rising housing prices. And that's been a problem which has been dealt with to the maximum extent possible in almost every country by using macro-prudential policy in particular the terms of trying to change the legally permitted terms of mortgage agreements. And so far that stayed more or less under control, but it's something which has been a difficult result of this crisis. I don't see this happening in the United States at present and Janet gave a speech yesterday which said we're likely to raise interest rates before the end of this year. I think if we stay on schedule it will probably take care of it. It's interesting the way you put it because that begs an interesting question of whether, and I assume you were referring implicitly to your prior experience in talking about the challenges facing countries whose financial systems had not been affected. Now you're in a different part of the world with a different responsibility, but should the US take into account the situation of the rest of the world, do we need more global co-ordination to prevent the risk of financial excesses elsewhere because the Fed does effectively set monetary policy for large chunks of the world? Well, we could do a lot of theoretical work on invent a global utility function and let one person be worth the same in every country and so forth and try and work out what's optimal. There is another approach. Our mandate is purely domestic and we would have a very hard time if we started getting into the business of global co-ordination. I think in any case the primary service we can do to the world economy is keep the United States economy in as good shape as we can and return it to growth as quickly as we can. We'll leave it for future generations to figure out the legal basis and the actual policies that would be needed for co-ordination. I think we're kind of conflicted internally on this. We like to talk about risk sharing, which I think suggests that some of the time there should be differences between the cyclical stages of different countries in the global economy, but actually when you listen to what people want, they want interest rates moving up and down together and I think they want the whole globe to go into crises together or something like that. I think that letting each country do its thing may produce a better long-term outcome. Maria, what's your take on that? Here we have on the panel the world's three big central banks represented. Would the world be a better place if you coordinated more explicitly? I couldn't agree more with Dan. Our mandate speaks of price stability in the euro area, so it's domestic and what we can do, however, and we do this, is to have regular exchanges of information, communication, but more than that seems to be difficult, both legally and frankly also economically, it's hard to design any such a process. A process for doing the coordination or a process for justifying the coordination? No, a process of coordination, what it means, we're just going beyond regular exchanges of information and so I'd agree with Stan on that. Maria, you run the biggest coordinated monetary policy in the world. So he's learned how hard it is to coordinate. Actually that's a very good segue to go to the last topic I wanted to cover before we open to questions, which is to try and stand back and I know it's very difficult for the three of you to abstract from the legal and all the other constraints of your mandate right now, but part of the purpose of these kinds of discussions is to think about central banking and optimal central banking in a broader context, and six, seven years after the crisis, do you think central banking has changed dramatically, should change dramatically? Do you need to have a deeper think about whether you have the right mandates, whether you need to, whether we need a more kind of existential rethink of what central banking is about, or basically are things fine? Hariko, let's start with you. As far as the bank of Japan is concerned, I don't say we have been in a continuous sort of crisis, but as far as inflation rate is concerned, from 1998 through 2013 until two years ago, we had a 15-year long deflation that posed a serious problem for the bank of Japan. We tried many things, but couldn't eradicate deflation, so two years ago, we substantially changed our monetary policy, and we have been implementing so-called quantitative and qualitative monetary easing, and the economy certainly has significantly improved, but still we have very low inflation. So I think until we completely eradicate deflationary mindset and achieve 2% inflation in a stable manner, we will continue to be in a, if not crisis, but an extremely difficult situation. Would we be in a better world if we had a higher inflation target? I mean, Mr Branshaw is here, and a few years ago he advocated a higher inflation target, higher than 2%. For us, I think 2% is the most appropriate, and we are aiming at achieving the 2% inflation target at the earliest possible time. At this stage, we don't think it necessary to consider another kind of target, 3% or 4%, or price-level target, or nominal GDP target, whatever target. At this stage, we stick to the most conventional or global standard kind of 2% inflation target. What's your take on this? Do you think when the history books are written, people will say those central bankers in 2015, they were still stuck in an old mindset that was completely wrong, or will they say they're in the middle of a very big rethink of what central banking is about? Well, we are in the middle of one because we haven't resolved the issue of how to deal with financial stability in the central banks, and that discussion is going on. You can say there's a very small difference between having a lexicographic ordering and saying financial stability is one of your considerations, is one of the things you should be thinking about. The problem with it is having a responsibility without the tools to handle it, which is say the problem that the Fed would have in the United States. We have some tools, a lot of the tools on the hands of others. There's things that need to be worked out in how this is supposed to work. We have the FSOC, the Financial Stability Oversight Committee, but the British have a system which is, I think, well designed. Now, you have to wait and watch how these things work, because you probably remember there was, everybody was entranced by the British financial, whatever it was, stability authority. FSA, but then came the crisis and it turned out that the entrancement was just a temporary love affair and they had to reformulate the system. We are still in the stage of designing things, so I don't think we know, but we have to deal with this. The other issue is a dual mandate and that, I think, is less significant than its weight in the discussion and I think it's less significant because I know of no central bank that has ever not paid attention to the level of output in the business cycle, whether or not it's an inflation target and I think if they didn't take that into account, they'd be in trouble pretty soon anyway. So, there's not a big difference. It's sort of ironic at the present that we have an output target and we have an inflation target and those are supposed to be conflicting but we're more or less there on the output target but we're not there on the inflation target so that we have to put in a lot more steam, not because we've got output in the loss function, but for the more traditional reason that we would have if we were a pure inflation target and that's sort of the opposite of the situation you might have expected to arise with a dual target. There's one other big picture question which is certainly current in the US which is the question of your role as a lender of last resort and that's an area where certainly some quarters are questioning what you can and should be doing and do you think that that's a debate that should be had or is it a misguided attempt to make it harder for central banks to do something that's existential to what they're supposed to do? Well again it's not something that we control the terms of debate or whether there is a debate. There's a debate going on now. There is an attempt to further restrict the capacity of the Fed to operate as a lender of last resort. This is a very complicated issue and it's complicated because as I said with financial stability we won't know until the crisis comes but I think that if the need ever arises for a lender of last resort action of the traditional sort that has been around in practice for 200 years written by a former editor of the economist, another illustrious editor of the economist and used frequently to good effect and not used once to bad effect in the great depression that we have to think very very hard about this issue. I think it creates concerns that are justified about what will happen in a crisis. Mario how do you think about the role I mean as the youngest central bank here? Has the crisis caused you to reflect on whether you have the right mandate, whether history books will say something different should be there, whether we're in a new era and whether you need to change? Well on the mandate that's one thing for example where the central banks shouldn't actually comment on because that's out. It's responsibility, entire responsibility of the legislator so we are not free to pick what's the best mandate but basically whether it makes a big difference or not I would completely agree with Stan. When we have a demand shock reacting to price stability we expand our monetary policy. When we have a supply shock we look through the changes in prices we don't react immediately so you see that in the end as he said it doesn't make much difference but in practice but other than that I wouldn't really want to comment on what's the best mandate for the ECB. It seems that the present mandate is such that we have by and large achieved our objectives. Now to your second question that's more complicated in a sense because well the crisis has produced many effects one of which is to change forever the ECB. It was quite clear with the crisis the divergences amongst countries have increased significantly so the ECB has reacted to this deciding that the mandate is always the same namely price stability in the euro area but the instruments have to change and in fact after a few years now we have a list a catalog of instruments which is much much bigger and that's not going to change any anymore I mean just that's going to stay so the ECB has perhaps exactly because of what you said being the youngest of the central banks has changed forever. Are these unconventional tools that are now part of your toolkit uh let's put it part of the new normal are they there for good? Well they are there when needed and they're used they're going to be used when when it's needed certainly if you ask me what is my ambition in two three years time well four five six years time uh seven nine years time is certainly not to be a zero lower bound I think that is that is certainly something that any any central bank wants to move from. If we're talking ten years time aren't those your first and second points linked no but if you if you wonder and use you mentioned this yesterday if you are if given your mandate and given where real rates are you are much more likely to be at the zero close to the zero lower bound than you would be if inflation had started higher so the two parts of my question are actually linked I understand you have your mandate and you mustn't comment on it but in over a 10 year horizon will central bankers be talking about seriously about whether it makes more sense to have a higher inflation target to limit the risk of being close to the zero lower bound I I wouldn't actually discuss what's the right inflation target we have we have had lots of research lots of work coming to this number two percent being done by lots of central banks economies and and all in all this this figure proved to be quite quite useful now by the way there are lots of people who are saying that in fact it should be zero so you see as soon as you start as soon as you start this discussion you you have both sides and so also I mean we've got to be modest now let's go back to two percent but just below two percent and then we'll talk