Equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation. The extension of our PEPP purchases over a longer horizon reflects the prolonged fallout from the pandemic for the economy and inflation. It allows for a continuous market presence and more durable support from our monetary stimulus.
In other words, ladies and gentlemen, monetary stability must now be pursued alongside financial stability. So far, through the series of reforms we have instituted, we have been able to keep the banking system in a position where its capital is able to absorb significant external shocks… and we are ready for the adoption of Basel 3 capital standards starting 2014.