In this critical period, we were convinced of the need to build a solid, robust and clearly defined foundation for our actions. In particular: •  We have always acted and will continue to act within the framework of the mandate assigned to us by the Treaty: our priority objective is to maintain price stability, defined as an inflation rate below, but close to 2% over the medium term. Fears concerning the possible inflationary effects of our policies are therefore completely unfounded. •  Moreover, we have always acted, and will continue to act, totally independently from the political authorities. It has always been perfectly clear that the responses to the real roots of the crisis can only be provided by the governments themselves and that monetary policy can never durably mitigate political shortcomings. Thus fears regarding the financing of euro area States are also groundless. Focus on OMTs I would like to conclude by presenting in greater detail the most recent ECB measure, known as Outright Monetary Transactions (OMTs). To understand the logic and power of this instrument, we need to make a brief excursion into monetary policy theory (before lunch… sorry! But it’s not that complicated). As you know, central bank monetary policy impulses are transmitted to the real economy via several different channels. In the euro area, with bank loans accounting for three quarters of the economy’s total financing, the “credit channel” is by far the most significant vector.
Fourth, the banking industry should undertake effective measures to reduce the number of cash and cheques used for credit card and loan repayments which totalled 101 million transactions in 2014. This would bring about operational  BIS central bankers’ speeches  3  efficiency and reduce costs in the banks’ operations. The industry should strive to achieve an annual decline rate of 15% per year similar to that of cheques; v.  Fifth, payment system infrastructure providers such as MEPS and MyClear should enhance their Memorandum of Understanding (MoU) to ensure any payment infrastructure development initiatives would not result in duplication of efforts by the banking system. In addition, both MEPS and MyClear should develop medium term roadmap to enhance payment system infrastructure to keep pace with innovation and meet user needs. This must be supported by consultation with relevant stakeholders and robust market assessment and cost-benefit analysis; and  vi. Last but not least, it is critical for the banking and payments industry to maintain confidence in the use of e-payments, Hence, the industry should continuously enhance their risk management measures and security features, and review the effectiveness of their customer education and awareness programs. On this note, I wish all of you an engaging and productive forum. Please take the opportunity to visit the exhibition booths to find out more on how you can benefit from the various business and payment solutions. 4  BIS central bankers’ speeches