It should be made clear, in particular, that, whatever the new tasks and functions of central banks, price stability should remain the primary objective of monetary policy. As I said, this may not be a sufficient condition to ensure financial stability. But it is certainly a necessary one. Looking at recent events, the credibility of central banks has enormously helped to contain financial instability and its effects, both directly and indirectly. Directly, because their credibility has allowed central banks to act forcefully in the knowledge that they could do so without “disanchoring” inflation expectations. And indirectly, because, with expectations firmly anchored, the risk of a deflationary spiral has been considerably reduced. Indeed, even when instant inflation turned negative in many countries for several months in a row, long-term inflation expectations remained remarkably stable. To maintain and preserve this necessary clarity, we are fortunate, in the Eurosystem, in having an appropriate and efficient framework. The Treaty specifies that the primary objective of monetary policy should be to achieve price stability; and that other goals can only be pursued without prejudice to this primary objective. The financial stability function fits naturally into this hierarchy. It cannot be pursued at the expense of the main objective. As you know, our approach to monetary policy making is organized around two “pillars”, with one specifically focused on monetary and credit aggregates. We have mainly used this second pillar to detect potential long-term risks to price stability.
[9] There are currently eight globally important banks in the euro area (in France, Germany, Italy, the Netherlands and Spain) holding additional buffers of between 1% and 2%, and 108 other systemically important institutions with buffers of up to 2%. Systemic risk buffers have been activated in five countries, with a range of between 0.5% and 3%, and the countercyclical capital buffers have been announced in seven countries (Belgium, France, Germany, Ireland, Lithuania, Luxembourg and Slovakia) with rates between 0.25% and 2%. For more information, see “Macroprudential measures in countries subject to ECB Banking Supervision and notified to the ECB” on the ECB website. [10] For a discussion of recent CCyB decisions, see Babić, D. and Fahr, S. (2019) “Shelter from the storm: recent countercyclical capital buffer (CCyB) decisions”, Macroprudential Bulletin No. 7, ECB. [11] See, for example, “  Refining the Stress Capital Buffer”, speech by the Vice-Chair for Supervision, Randal K. Quarles, at the Program on International Financial Systems Conference, Frankfurt, Germany, 5 September 2019. European Central Bank Directorate General Communications Sonnemannstrasse 20, 60314 Frankfurt am Main, Germany Tel. : +49 69 1344 7455, E-mail: media@ecb.europa.eu Website: www.ecb.europa.eu Reproduction is permitted provided that the source is acknowledged. Media contacts  Copyright 2019, European Central Bank