Ladies and gentlemen, the Vice President and I are very pleased to welcome you to our

press conference. We will now report on the outcome of today's meeting of the Governing Council, which was also attended by the Commission Vice President Mr. Dombrovskis. Based on our regular economic and monetary analysis, we today conducted a thorough assessment

of the strength and persistence of the factors that are currently slowing the return of inflation to levels below but close to 2% in the medium term and reexamined the degree of monetary accommodation.

As a result, the Governing Council took the following decisions in the pursuit of its price stability objective. First, as regards the key ECB interest rates, we decided to lower the interest rate on the deposit facility by 10 basis points to minus 0.30%.

The interest rate on the main refinancing operations and the rate on the marginal lending facility will remain unchanged at their current levels of 0.05% and 0.3% respectively.

Second, as regards non-standard monetary policy measures, we decided to extend the asset purchase programme. The monthly purchases of €60 billion under the asset purchase programme are now intended

to run until the end of March 2017 or beyond if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its aim of achieving inflation rates below but close to 2% over the medium term.

Third, we decided to reinvest the principal payments on the securities purchased under the asset purchase programme as they mature for as long as necessary.

This will contribute both to favourable liquidity conditions and to an appropriate monetary policy stance. The technical details will be communicated in due time. Fourth, we decided to include in the public sector purchase programme euro-denominated marketable

asset instruments issued by regional and local governments located in the euro area in the list of assets that are eligible for regular purchases by the respective national central banks. Fifth, we decided to continue conducting the main refinancing operations and the three-month

longer-term refinancing operations as fixed rate tender procedures with full allotment for as long as necessary and at least until the end of the last reserve maintenance period of 2017. Today's decisions were taken in order to secure a return of inflation rates

towards levels that are below but close to 2% and thereby to anchor medium-term inflation expectations. The latest staff projections incorporate the favourable financial market

developments following our last monetary policy meeting. They still indicate continued downside risks to the inflation outlook and slightly weaker inflation dynamics than previously expected. This follows downward revisions in earlier projections exercises. The persistence

of low inflation rates reflects sizeable economic slack weighing on domestic price pressures and headwinds from the external environment. Our new measures will ensure

accommodative financial conditions and further strengthen the substantial ease and impact of the measures taken since June 2014, which have had significant positive effects on financing conditions, on credit and on the real economy. Today's decisions also

reinforce the momentum of the euro area's economic recovery and strengthen its resilience against recent global economic shocks. The Governing Council will closely monitor

the evolution in the outlook of price stability and, if warranted, is willing and able to act by using all the instruments available within its mandate in order to maintain an appropriate degree of monetary accommodation. In particular, the Governing

Council's purchase programme provides sufficient flexibility in terms of adjusting its size, composition and duration. Let me now explain our assessment in greater detail, starting with economic analysis. Euro area real GDP increased by 0.3% quarter

on quarter in the third quarter of 2015, following a rise of 0.4 in the previous quarter, most likely on account of a continued positive contribution from consumption alongside more muted developments in investment and exports. The most recent survey

indicators point to an ongoing real GDP growth in the final quarter of the year. Looking ahead, we expect economic recovery to proceed. Domestic demand should be further

supported by our monetary policy measures and their favourable impact on financial conditions, as well as by the earlier progress made with fiscal consolidation and structural reforms. Moreover, low oil prices should provide support for households'

real disposable income and corporate profitability and, therefore, private consumption and investment. In addition, government expenditure is likely to increase in some parts of the euro area, reflecting measures in support of refugees. However, the economic

recovery in the euro area continues to be dampened by subdued growth prospects in emerging markets and moderate global trade. The necessary balance sheet adjustments in a number of sectors and by this sluggish pace of implementation of structural reforms.

This outlook is broadly reflected in the December 2015 Eurosystem staff macroeconomic projections for the euro area, which foresee annual real GDP increasing by 1.5% in 2015, 1.7% in 2016, 1.9% in 2017. Compared with September 2015

ECB staff macroeconomic projections, the prospects for real GDP growth are broadly unchanged.

The risks to the euro area growth outlook relate in particular to the heightened uncertainties regarding developments in the global economy, as well as to broader geopolitical risks. These risks have the potential to weigh on global growth and foreign demand for euro area exports and on confidence more widely. According to Eurostat's flash estimate,

euro area annual HICP inflation was 0.1% in November 2015, unchanged from October, but lower than expected. This reflected somewhat weaker price increases in services

and industrial goods, mainly compensated by a less negative contribution from energy prices. On the basis of the information available in current oil futures prices, annual HICP inflation rates

are expected to rise at the turn of the year, mainly on account of base effects associated with the fall in oil prices in late 2014. During 2016 and 2017, inflation rates are

projected by our previous monetary policy measures and supplemented by those announced today by the expected economic recovery and by the pass-through of past declines in the euro exchange rate. The governing council will closely monitor the evolution

of inflation rates over the period ahead. This broad pattern is also reflected in the December 2015 Eurosystem staff macroeconomic projections for the euro area, which foresee annual HICP inflation at 0.1% in 2015, 1% in 2016 and 1.6% in 2017.

In comparison with the September 2015 macroeconomic projections, the outlook for HICP inflation

has been revised down slightly. Turning to the monetary analysis, recent data confirms solid growth in broad money, with the annual rate of growth of M3 increasing to 5.3% in October 2015, from 4.9% in September. Annual growth in M3 continues to be mainly

supported by its most liquid components, with a narrow monetary aggregate M1 growing at an annual rate of 11.8% in October, after 11.7% in September.

Loan dynamics continued the path of gradual recovery observed since the beginning of 2014. The annual rate of change of loans to non-financial corporations increased to 0.6% in October, up from 0.1% in September.

Despite these improvements, developments in loans to enterprises continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment

of financial and non-financial sector balance sheets. The annual growth rate of 1.1% in September. Overall, the monetary policy measures in place since

June 2014 have clearly improved borrowing conditions for both firms and households and credit flows across the euro area. To sum up, a cross-check of the outcome of the economic analysis, with the signals coming from the monetary analysis, confirmed the need for further monetary stimulus

in order to secure a return of inflation rates towards levels that are below but close to 2%. Monetary policy is focused on maintaining price stability over the medium term, and its accommodative stance supports economic activity. However, in order to reap

the full benefits of our monetary policy measures, other policy areas must contribute decisively. Given continued high structural unemployment and low potential output growth in the euro area, the ongoing cyclical recovery should be supported by

effective structural policies. In particular, actions to improve the business environment, including the provision of inadequate public infrastructure, are vital to increase productive investment, boost job creation, and raise productivity.

The swift and effective implementation of structural reforms in an environment of accommodative monetary policy will not only lead to higher sustainable economic growth in the euro area, but will also raise expectations of permanently higher income and accelerate the beneficial effects of reforms, thereby making

the euro area more resilient to global shocks. Fiscal policies should support the economic recovery, while remaining in compliance with the fiscal rules of the European Union. Full and consistent implementation of the Stability and Growth Pact

is crucial for confidence in our fiscal framework. At the same time, all countries should strive for a more growth-friendly fiscal consolidation. For a more growth-friendly composition of fiscal policies. We are now at your disposal for questions.

Brian Blackstone with Wall Street Journal.

With your deposit rate cut today, are you at the lower bound, or is there more room to cut that rate? And my second question is, it seems like what you've done is a little bit on the low end of the range of what the financial markets had expected in terms of your stimulus package today.

It seems like the initial reaction in the financial markets bears this point. Why didn't you do more, given how much you've warned about the risks of low inflation? Why didn't you raise the monthly purchase amount? Why didn't you cut the deposit rate more? Thank you. Thank you. Well, let me tell you how we came to take the decisions we've taken.

In the last Governing Council, we decided to assess whether the degree of monetary accommodation that we had achieved until then was adequate or needed to be recalibrated. And this exercise basically showed three conclusions.

The first is that we are witnessing a continuing recovery, gradual but continuing recovery, driven mostly, as I said a minute ago, by consumption. The growth rates in this year have been 0.4, 0.4 and 0.3 percent over the last three quarters.

The drivers to this recovery are, first, our accommodative monetary policy, second, less headwinds to our fiscal policy,

and third, very importantly, is the oil prices, of course, which are supporting real disposable income. But also our policies have been effective also on the inflation front, because if you observe, especially in the last month, we've observed that for one, I wouldn't say the first time, but certainly after a long time,

the correlation between our inflation expectations measures and the current inflation of the oil prices has decreased or has just disappeared. So, overall, the conclusion about our policies was that they have been effective.

Let me also, well, I can dwell on that later to show, to give you a few figures of how effective these policies have been in improving the credit conditions, in improving the financial markets conditions,

and in supporting what we have seen so far happening in the real economy. The question then was, have they been effective enough for us to be confident that we would reach our objectives about inflation within the horizon that we have planned?

And the answer we gave ourselves was, not enough, so we have to do more. So let me say this very clearly.

We are doing more because it works, not because it fails. We want to consolidate something that's been a success. And why did we come to this conclusion? Well, you see, we said that the last macroeconomic projections

implied a downward revision in inflation, very small, but that's still there. Now, this downward revision comes after a long series of downward revisions in inflation. Also, the projections contained the effect of our policy communications in the last month already.

And in spite of that, they had a downward revision. Also, after the cutoff date, we had another date on inflation which was likely lower than expected. So for a variety of reasons, we decided that our monetary policy accommodation

needed to be recalibrated so as to have a faster convergence of our inflation objective to our 2017 horizon. Now, what did we do? Well, we took several decisions that I've just illustrated, but one of them comes pretty new,

namely the reinvestment of principal payments. Now, that is a quite important measure because it basically says that we intend to maintain the degree of monetary accommodation

and favorable conditions for the liquidity longer, for longer horizon than we had been saying so far. Which means that the conditions of a quite abundant liquidity and high excess liquidity will continue for a long, long time.

And we shouldn't discount another fact that we have not been discussing so far, that there are a series of what we call autonomous factors coming into play in the years ahead,

that reduce the excess liquidity. And so there are several of these. One is the repayment of the TELTRO. Another one is the demand for banknotes. Another one is the bonds purchased under the S&P program that may come due.

So we sort of counteract this reduction and we actually may do even more than offset these reductions, which means that the conditions for this liquidity will ensure that the bonds we purchased and we are purchasing and will be purchasing will stay on our balance sheet for a long time.

So I think these are very significant decisions. We contribute, we are confident that these decisions actually are adequate to achieve our objectives.

Like I said, we decided this cut in the deposit rate, we think it's adequate. Ms. Turek. Johanna Turek, Market News. You've just explained your reasoning, but nevertheless, as Brian pointed out, financial markets appear to be disappointed.

So what is the reason there? Do you think that something went wrong in your communication in the run-up to the decision? Did you perhaps overestimate your ability to convince fellow policymakers to decide something even more aggressive?

Or do financial markets not understand yet how powerful these measures actually are? I'm sorry. The second question, could you perhaps give us an idea about the discussion on the Governing Council and whether the decision today was, or all the five decisions were unanimous? Thank you.

No, they were not unanimous, but there was a very large majority in favor of this package. Very large. On the first, no, I don't think so. I don't think our communication was wrong. I think these measures need time to be fully appreciated, and we will see.

Mr. Speziale. Thank you. Mr. President, you have said many times and today too that QE is working, is working better than expected.

At the same time, you have also said that inflation is getting back to where you want it to be slower than you thought. So how do these two things square up? Is this because the euro economy works differently than you thought?

And my second question is, at Alte Oper here in Frankfurt last month, you said that you want to bring inflation back to close to 2%, without saying just under 2%. Can this be read as a sign that you would tolerate some overshoot to avoid the risks of too low inflation for too long?

Thank you very much. My second question is that our inflation rate ought to go to close to 2%, but below 2% over the medium term,

and one should certainly take into account the fact that it was well below 2% for a long time. On the second point, we do say, and we just said that our QE has been quite effective. Let me give you a few figures.

The market-based financing conditions showed a fairly significant success of our policies. Euro-era 10-year government bond yields fell by around 120 basis points between June 2014 and now. We have the same decline in yields on bonds issued by firms, by banks,

and basically the declines that the cuts in the deposit facility rate have enhanced the power of our transmission channels. But the most important thing is the fall in the cost of credit.

The cost of credit for the Euro-era, for the whole of the Euro-era bank lending rates fell by approximately 80 basis points, just think about that to achieve that under normal circumstances, one needs a reduction in interest rates by 100 basis points,

and the transmission channel of this reduction to lower lending rates has been faster. For so-called vulnerable member states, such reduction was to up 140 basis points, so credit has become much cheaper.

Credit volumes have become much broader and more significant for both households and firms all across the Euro-era. Spreads have been going down between large borrowers and small borrowers and between borrowers in the vulnerable countries

and in the non-vulnerable countries. So all in all, all these measures have had an effect on the economy. So let me give you a figure produced by our staff. In absence of our measures, inflation would be at least half a percentage point

lower next year and about a third of a percentage point lower in 2017. But also the impact on GDP is very sizable. Our measures are contributing to raise GDP by almost 1% in the years 2015-2017.

So I think we rightly claim that our policies have been effective. Because we calibrated in January 2015, we calibrated QE on the basis of certain conditions,

and these conditions have changed through 2015, and in particular during the summertime, because of changes in the external factors, the weakening of emerging market economies, the appreciation of the exchange rate and so on.

All this produced lower inflation, so we had to recalibrate. And we are going to do this on and on as the external conditions will put at risk the achievement of our objectives. Ms. Chatterley.

Julia Chatterley, CNBC International. I think some of the disappointment that we're seeing in the market can be tied to the lack of movement on the size of monthly purchases. Can I just ask you if you did talk about increasing that size and whether somewhere in there we can tie the decision not to the prospect of diminishing returns,

given how low sovereign bond yields already are. And you did talk about the deposit rate. You said it was adequate at this moment, but can I ask again, are we at the lower bound for the deposit rate, please?

We have a menu of options. Fortunately, our monetary policy has many tools. Our asset purchase program is flexible. We can always adjust its horizon, its size, its design. And we are not going to be, I would say, hampered in doing this by technical issues.

As a matter of fact, we are going to revisit or review some of the technical parameters of our program in the spring. This time we decided that the extension of the horizon, and especially the introduction of the reinvestment,

would be the right thing to do. And the new calibration that was achieved after that would tell that we would be able, we are confident, to reach our objectives within the horizon as we planned. Which means, basically, we are not excluding the use of all other instruments if we were to decide that they were the right ones to do.

I said before that the cut we decided today is adequate, period.

Ms. Jones. Claire Jones, Financial Times. You've noted on many occasions that QA has had quite a big impact on lending conditions, on credit markets,

yet we've seen very little change in core inflation since January. Is that what you would have expected when you first announced QE? And if not, why do you think it's happened, and why will what you've announced today dress this seeming contrast

between the impact of QE on credit markets and on the real economy? Well, there are many, many factors that affected the core inflation projections as we had it since January 2015.

The most important ones I've just mentioned is the oil prices and the situation in the emerging market economies. What we've done since then is to create a very favourable financial condition and credit markets condition

so that firms and households, even though burdened by these external factors, could find credit easier to access and more abundant. And we've seen this. We've seen this too, especially mainly through higher consumption and higher real disposable income.

And the interesting thing to see is that for now, for the first time this year, the recovery is becoming broader and is actually driven mostly by consumption rather than exports. And the other interesting thing to see is that consumption and real disposable income move together,

namely the savings rate is flat, which is also a good sign. So we see that gradually our QE is translating itself into improving economic conditions in the euro area.

Ms. Ebersold. Yes, Ebersold. At the last meeting you told us that expert groups were analysing the functioning of APP.

Can you tell us something on the outcome, especially what channel worked best, so the portfolio rebalancing or expectation? Yes, the measures that the Governing Council decided today had been discussed in a quite detailed fashion by all the relevant committees.

And basically our decisions do reflect their discussions. So they analysed, responding to the question that was asked before, why have we chosen to widen the horizon,

why have we chosen to introduce this reinvestment factor. Also this was analysed by the committees and that we basically followed their views in taking these decisions. Mr O'Donnell.

Could you quantify the impact of your purchases in the municipal bond market, just how big this market potentially is for the ECB? And in the future there are very many other securities which are potentially there to be bought. Could you perhaps shed some light on other potential areas where the asset purchase programme could be extended to,

for example in the area of non-performing loans there would be the possibility of extending asset backed security purchases to instruments that would include at least some element of non-performing loans in the future perhaps? I would say first it's too early to say what's the extent of our purchases in the regional bonds that I've just stated in the introductory statement.

It's too early to say, but it's also too early to say in which direction we're going to extend if we'll ever need to extend.

Because so far we don't have to. We have the overall situation. It's been said several times that we wouldn't be able to buy the bonds and in fact bonds are there to be bought in good supply. So it's just too early to project further extensions. It would be also premature.

Mr Malin. Dave McHugh, AP. And then we'll take Mr Malin afterwards. Sorry. Mr Draghi, my first question is Jan Malin from Handelsblatt.

My first question is on the deposit rate. What is the main intention behind this lowering? The experience seems to be quite mixed in countries like Switzerland. Is it supposed to push down the exchange rate of the euro?

And my second question is on the ANFA agreement between ECB and national central banks. Some national central banks seem to have bought quite large amounts of assets during the past years, while others have not.

Is that a cause for concern for you? Well, on the second question, look, ANFA purchases are entirely a matter for national central banks. They decide their investment policy in complete independence. Often it's very hard to understand what are the purposes, why they buy certain bonds.

Often, for example, very often it's for their pension funds. I would exclude completely, you didn't say that, but you may have thought about this in your mind. I would exclude completely any possibility of monetary financing. They are not buying from the primary market and their investment policies are pretty broad based.

So it's a question that I think you, as far as you should ask them. On the first point, we simply observed that cuts in the rate on the deposit facility vastly improves the transmission of our monetary policy.

For example, some of you asked or is about to ask why we left the MRO unchanged. Well, we left the MRO unchanged mainly because all the short-term interest rates now follow the rate on the deposit facility,

which has become mainly, which has become really the driver of our monetary policy. And then this will have consequences, of course, positive consequences on the real economy. Thank you.

The level of ECB accommodation, as David McHugh from the AP, the level of ECB accommodation over the last year or so has put some pressure on the central banks in other countries, Switzerland, Denmark, Sweden. I'm just wondering the extent to which the ECB considers the plight of its neighbors when it's doing monetary policy.

And what, if anything, communicates to them more? I think this is, you know, this is actually, it's a very, very important question that we ask ourselves all the times, not only with respect to other countries here in Europe, but also with respect to the monetary policy and the central banks of emerging markets.

And we really have to think and to reflect that we are bound by our mandates. Our mandates are national mandates. Our mandates are based on our own national jurisdictions. This holds for the ECB, holds for the Fed, it holds for the Bank of England, for all central banks.

But would this mean that we don't talk to our colleagues? No, certainly not. So there is a fairly extensive, I would say, habit of consultation, of discussion, of explanation more than consultation,

of explanation of the reasons why we do certain things. And so we have what we call the spillovers and the effects of these spillovers in mind, certainly. But as I said, we are bound by our mandates.

Mr. Lacour? Thank you, Jean-Philippe Lacour. Mr. President, by increasing the asset purchases until 2017, we must have in mind that then the balance sheet of the ECB could reach roughly 40% of the global Eurozone in GDP.

Is it a level or is it not a burden that at one level could be too heavy to bear and that could play a role in the discussion when you decide to extend or not the amount of this program?

And secondly, can you explain us the rationale behind this answer you gave today to the ombudsman of the European Parliament imposing a quiet period for all governors one week before a meeting like today? Thank you.

Thank you. On the first point, the balance sheet of a central bank is an instrument. As such, it should be used to reach the objective, which is price stability, as we have defined here.

So there is a size that is better than another size. The only gauge to this is to reach the objective of price stability. I would say the other part of your question is, if need be, would we be able to sort of drain this liquidity in?

Do we have the instruments? The answer is yes, we have the instruments. We have the instruments. On the other question, it's not the ombudsman of the European Parliament.

There is an ombudsman and then there is a question by the European Parliament. So we have updated our guiding principles for external communications to clarify and amplify what is already practiced.

During the quiet period, there will be no discussion of monetary policy with representatives from financial institutions. So the exact text, which was updated on the 3rd of December, now reads, The members of the Executive Board reaffirm their adherence to the quiet period principle,

whereby speeches and public remarks given in the seven days prior to each scheduled monetary policy meeting of the Governing Council should not be such as to influence expectations about forthcoming monetary policy decisions.

Similarly, the members of the Executive Board will not meet, not talk to the media, market participants, or outside interests on monetary policy matters during that period. So we greatly appreciate the constructive dialogue we had with the ombudsman on all aspects of transparency, which we value highly. And by the way, we just received a letter from the ombudsman, a highly congratulatory letter.

Mr. Conti. Domenico Conti of ANZ, a news agency. Mr. Draghi, you said that the

public asset purchase program would go on until March 2017 or further if necessary. Now how close is this commitment to basically open-ended asset purchases? I'm sorry, how? How close is this commitment, this statement to actually doing open-ended asset purchases?

As long as necessary means that this will go on and on, right? Not really, no. There is a date, but it's also a condition, and the condition is,

and it's part and parcel of our foreign guidance, is that until we see a sustained convergence towards our objective of a rate of inflation which is below but close to 2%. So we give a date, and then we say, if that is not enough, we can continue.

And we said, today we say that we are going to reinvest the principles of the bonds that we purchased. It's quite important to understand that this reinvestment may start before March 2017, but will certainly continue after March 2017.

So the bonds will stay on our balance sheet after March 2017. Mr. Perez? Hi, this is Claudio Perez from El Pais, Spain.

Last year in Jackson Hole you advocated for a policy mix with monetary policy reforms, investment and fiscal policy, and today you have emphasized the role of fiscal policy. Do you miss more stimulus in countries, more fiscal stimulus in countries with margin like Germany, for example,

and do you consider that the neutral fiscal stance that the European Commission is advocating for the Eurozone as a whole is adequate now in a sort of a liquidity trap? At this point in time, by the way, we had a brief exchange on this issue,

and our conclusion now is that, first of all, the first answer should be given by the Commission. The second point is that we'll continue reflecting on this, and we will have a view on what is the degree of appropriateness of the fiscal stance,

whether we have a view about the aggregate fiscal stance, what is the degree of compliance with existing rules, whether the flexibility which has been exercised before all the terrible happenings of this year,

so before the recent terrorist attacks, but also before the refugees' events, whether that flexibility will be justified. So there are lots of factors that are playing all together.

How do we assess the fiscal stance today in presence of the previous flexibility, the refugees, the need for security of the euro area? It's a very complicated question, so we are going to reflect on that. Mr. Plickert?

Mr. Draghi, I would like to come back to the issue of the securities purchases by national central banks you just mentioned. There have been some calculations being published in a German Sunday newspaper that the Italian central bank bought up to 100 billion, and the Bank de France also had a similar volume of securities purchased under the ANFA,

and you mentioned yourself it's very hard to understand these purchases. How can you be so sure that they are not bordering to monetary financing of the states if they are so hard to understand? And my second question, why don't you publish these documents of the ANFA

to make it more clear to every observer what they are about? As I said, you should ask them. That's the answer. But I can exclude completely any monetary financing, that's for sure, because they would be compelled to communicate to ECB. So there's no monetary financing in these purchases. Other than that, the national central banks decide their investment policies

and their needs, and it's their competence and their autonomy. Some of them communicate, by the way, some others don't. You have central banks that don't tell anything about ANFA, so you wouldn't be able to know how many bonds they purchased.

So the question that you may have about ANFA should be asked to the national central banks. And when I say it's very hard to understand, I'm sorry, I don't want to be misunderstood. It's very hard to understand what is the investment policy of the national central banks because each one of them has an investment policy.

It's not that we are trying actually, we have a say in their investment policy. We don't have a say in their pension funds, for example. Ms Dimtha. Thank you, Sofia Dimtha from Magatano Grace.

Two questions on Grace. Is the conclusion of the first review the only precondition for the reinstatement of the waiver and the inclusion of Greece in the QE, and how easy it could be to close the first review since the pension reform is already raising fears for political instability.

Do you share those fears? My second question. Some politicians in Greece say that the shareholdings of the Greek state and the pension funds in Greek banks have become worthless because of the recapitalization method imposed by institutions. What is your view? Thank you very much. Well, on the pension issues, really this is an issue for the institutions

to discuss with the government as part of the review in January and I have nothing else to add. On the recapitalization of the banks, let me just, I'll give the floor to the Vice President, but let me just say that all those decisions

have been decisions by the banks themselves and the government to some extent. Please, Peter. Thank you on this. There are, of course, investments, public investments in the banks. They have been done, for instance, in the previous round of recapitalizations with shares with limited voting rights, but with full economic rights,

meaning the same rights to dividends as any other. So there is, in that respect, not a problem of valuation but also public shares. They participate, of course, in the economic results of the banks

but they are limited in terms of their voting powers. And this time, as you have seen, in the case of two banks, they were able to fill all the shortfalls with private investors' money and there are other two that were not able to do so.

So they were able to do so in what regards the shortfall for the baseline stress test and the asset quality review, but not for the adverse scenario and for that they will require some money, which will be public money, which may be invested into the banks in a proportion of 70% to 30%,

17% in cocos and 30% in shares, which of course will benefit from any profits or dividends that the banks will get in the future. So that's the situation.

So the statement that those public investments are worthless is not correct. Regarding the waiver and the participation in QE, you said everything you wanted to say? No, not really. I was actually... No, no, because it's well known, by the way, the policy that we have regarding the two things.

So in what regards the waiver, the main condition is that the Governing Council will be satisfied that the country under a program is complying with the program

and that could even happen before the conclusion of the review if we would be close enough to that end of the review and we would be convinced that the review would become successful.

So it's not a date, it's an assessment of the compliance with the program. Regarding the participation in QE, it's more complex and it does not depend only on the successful completion of the review.

Mr. Akagawa. Shogo Akagawa, Japanese Nikkei. You said the majority of the members have for the new measures. Did you discuss this time the side effects or risks of the additional measures in the Governing Council?

If yes, what kind of, and how can you avoid those risks? Is there also a discussion in the Governing Council? Thank you. No, this time I wouldn't say that we've discussed the side effects and risks

but it's a discussion that we have ongoing anyway. We are closely monitoring these risks. We are aware that these risks may be there. So that's why, first of all, try to know and learn as much as one can about these risks all the times.

Second, do we have evidence about these side effects? No, so far we don't have evidence. Especially the growth in credit accompanied by leverage, by leverage the phenomenon that we've seen pre-crisis. We don't see that.

As I've given, I've just given to you figures about credit. Credit is picking up, it's coming back. But it's very, very subdued yet. And we don't see especially systemic risks. We may have risks, localized risks in different parts of the financial system.

And they should be addressed by macro prudential policy measures. Certainly not by changes in monetary policy. Thank you. Mr. Merli? Alessandro Merli of Il Sole 24. You've alluded to the recent terrorist attacks.

I wonder if the possible effect, if there are any, of the terrorist attacks on the economy were already included in your macroeconomic projection. Or what is your assessment of that? My answer to this frank answer is we don't know.

We certainly have in mind that the situation ahead is full of geopolitical risks. And that's why we have to be alert. That's why we have to be certainly continuing our effort to pursue and achieve the price stability objective.

Well aware that the surrounding conditions may actually get worse because of these geopolitical risks. So I should say that in the present measures, the measures we've decided today, there is confidence but there is no complacency.

The last question to Mr. Ewing, please. Jack Ewing, New York Times. One of the side effects I think that's very clear from your measures has been that the euro has lost value against the dollar.

It could get close to parity pretty soon. I know that the currency rate is not a policy goal but it does seem to have been a fact. My question is, is there a point when the euro gets so low against the dollar that the negative effects start to become a concern?

Is there a point when the euro would lose so much value that you would start to worry about it? Thank you. Thank you. You know, we, and I've said this, that for us the exchange rate is not a policy target.

But of course it's important for price stability and for growth. So when we decide our monetary policy measures, we have in mind as objectives the inflation and the path to our objective. At the same time it's quite clear that whatever we do and whatever everybody does in the world,

every central bank does in the world, affects the exchange rate. And this in turn will have effects on price stability and growth. So it's very difficult to respond to your question whether we have in mind a level of the exchange rate.

We have in mind only our objectives of inflation and to a second extent growth. Thank you very much.