But structural factors are also playing a role: higher import volumes as a result of advanced globalisation have increased the importance of international prices relative to domestic prices, forcing domestic mark-ups to be less sensitive to the state of the domestic economy. This may imply that monetary policy has to react more aggressively to counteract shocks. So in combination, central banks may be facing a two-pronged challenge to their mandates: a situation where, due to the role of global inflation, more stimulus is needed than in the past to deliver their domestic mandates; and where, due to the falling equilibrium interest rates, their ability to deliver that stimulus is more constrained. That would certainly offer one explanation for why monetary policy has needed to stay accommodative for so long across advanced economies. This does not make monetary policy ineffective. As we have seen in the euro area, even with a low equilibrium rate central banks can still steer conditions in the wider economy by targeting directly the constellation of interest rates that matter for borrowers. But one nonetheless cannot deny that the fall in the equilibrium rate poses a challenge for central banks. This challenge for monetary policy has been recognised, with a number of innovative solutions proposed by academics. Let me mention two but also say upfront that I am not particularly convinced by any of them. One option that has been mooted is to allow nominal interest rates to go deeper into negative territory.
And there is still an urgent need for more structural reforms – 4/7  BIS central bankers' speeches  because third phase of the crisis has been, above all, structural. The third phase: the re-emergence of structural challenges This third phase – which we are still in today – has been characterised by two main challenges: low inflation and low growth. Just as in the initial phase of the crisis, these are common challenges for advanced economy central banks. But what has become increasingly clear is that the challenges today have a much stronger structural element. Low global inflation is partly a cyclical phenomenon – linked to falling energy prices and the slowdown in major emerging market economies – but it is also a result of structural changes brought about by globalisation. And the secular slowdown of global growth has brought with it declining long-term interest rates across the advanced world. To be sure, the intensity of these challenges has varied across jurisdictions. The euro area, still recovering from its double dip recession, has faced a more prolonged period of low core and headline inflation, which the ECB has reacted to by launching three new unconventional tools: a set of targeted long-term refinancing operations with in-built incentives for banks to lend, a negative interest rate policy, and an asset purchase programme encompassing public and private sector securities. These measures aim both to smooth transmission and to expand the policy stance to combat excessive disinflationary pressures.