Today, the euro accounts for 20% of international reserves, second only to the dollar. An internationally recognised currency generates economic gains: financial markets are more attractive to domestic and foreign investors, more liquid, and thus more efficient. But it also carries a political weight: when Mario Draghi speaks at the G20, the whole world listens to Europe attentively, just as when Janet 2/6  BIS central bankers' speeches  Yellen speaks for the United States. Overall, this list of benefits is impressive, particularly when you think that the euro is only 18 years old. More importantly, we have come this far despite the global financial crisis, which triggered the deepest recession in three generations, and despite the euro area sovereign debt crisis a few years later. 2. Let me now turn to monetary policy: the euro has passed the stress test of the crises. a. Monetary policy Successful crisis management The Eurosystem has deployed an innovative and resolute monetary policy strategy, which has helped stabilise the euro area economy and reduce the costs of crises. Let me briefly recall what we have done [slide]. We had first to face, like you, the consequences of the collapse of Lehman Brothers. Like many other central banks, we reacted promptly by offering unlimited liquidity to financial intermediaries, sharply lowering our main refinancing rate and providing international swap lines. Yet, this was only our first challenge. The Lehman episode paved the way for the euro area sovereign debt crisis and its amplification through the “bank-sovereign” nexus.
For the future, on the most appropriate way to reduce the intensity of our accommodation when it becomes warranted, two principles should in my view guide us: these are prudence and effectiveness. We need to be prudent, because the recovery is still fragile. This amounts to asking whether the adjustment of inflation towards our target of below, but close to, 2% would continue without our monetary stimulus. At present, the ECB’s Governing Council does not think this is the case. Underlying inflation, without oil and food prices, remains below 1% and should, according to our forecasts, gradually pick up to 1.8% in 2019 according to the pace of wage increases. We also need to be effective, in the sense that, among our combination of various instruments, we should withdraw last the measures that are mostneeded to secure a sustained adjustment in the path of inflation consistent with our target. We will continue to assess the situation with great pragmatism. There is no predefined split between the doves and the hawks on the Governing Council, as is sometimes claimed. I am confident that our future strategy, as the present one, will be the result of a collective discussion and a cohesive decision. b. Institutional framework In parallel, the institutional framework of the euro area has been improved in response to the crisis. Member states have secured key steps to reinforce the resilience of the euro area for the future.