In the summer of 2014, the persistence of disinflationary forces could be clearly identified: first, measures of underlying inflation had been drifting down in synch with headline inflation for more than a year, and had reached historical lows.7 Second, for the first time since the inception of Monetary Union, longerterm inflation expectations had started to fall as well. Such fundamental risks to price stability required a forceful monetary policy response. Accordingly, the ECB deployed a series of unconventional monetary policy measures to ensure price stability. The comprehensive package of June 2014 comprised targeted long-term refinancing operations (TLTROs) and a cut of the deposit facility rate, moving it into negative territory. This package was combined with a, to start with, small asset purchase programme initially involving only private sector securities, which was later expanded to include public sector securities (becoming known as the public sector purchase programme – PSPP) and then scaled up over time. These measures were accompanied by further cuts in the deposit facility rate and further TLTROs; moreover, they have been complemented by our forward guidance.
Amund Holmsen: The theoretical background for macroprudential policy Speech by Mr Amund Holmsen, Executive Director of Norges Bank (Central Bank of Norway), at Norges Bank’s Finance Workshop, Oslo, 9 October 2014. *  *  *  Thanks to Henrik Borchgrevink. This speech does not contain any assessments of the current economic situation or policy-related statements. Songs about financial stability are few and far between. But Odd Nordstoga has written a song about just that, entitled Lykkeliten (Happy Times) 1: “Happiness is a time without debt, and reading the end of a book when in bed”. That financial stability can be so directly associated with a feeling of happiness is an encouraging point of departure for macroprudential policy. Nordstoga has actually turned economic theory upside down. Happiness – or utility as we economists tend to call it – is usually associated with consumption. We can borrow to finance consumption. Credit provides an opportunity to advance consumption in time. In that respect, more credit engenders more happiness – not the opposite. But after the goods have been consumed, the loan still exists. Debt creates risk in the financial system. Nordstoga may then prove to be right. A time without debt may be a happier one. The business of banking is such that it can trigger or amplify an economic downturn. Subsequent to the financial crisis, macroprudential policy has evolved into a supplement to both traditional banking regulation and stabilisation policy.