the eurosystem are currently assessing how to align the letter and spirit of our rules. shortage of safe assets the current low interest rate environment has not just revealed weaknesses among banks, it has also called into question some traditional practices of insurance companies and pension funds. for many insurers in germany, for example, guaranteed returns have become an issue. in the current market environment, it is becoming increasingly difficult to achieve the guaranteed interest rates of 4 % that were commonplace in contracts concluded in the mid - 1990s. the german ministry of finance has reduced the guaranteed interest rate for next year from 1. 25 % to 0. 9 %. many insurance companies are now increasingly turning to unit - linked products. 3 / 5 bis central bankers'speeches in addition, new regulatory requirements are increasing the demand for safe assets. german government bonds alone are yielding negative returns on maturities of up to eight years. against this backdrop, discussions are under way as to what can be done to counter this shortage of safe assets. one suggestion is that market participants create a new kind of safe asset, known as european safe bonds3, consisting of the senior tranche of a portfolio of existing bonds from different euro area countries. the advantage here would be that there would be no joint liability, as there is in the case of other proposals of this kind. it would most likely be difficult to counter the obvious assumption of public opinion that this would be a surreptitious mutualisation of sovereign debt, particularly since this model is very complicated. this new type of debt security could be at most an interim solution on the way to a true fiscal union in the euro area, allowing for both joint income and federal control over spending. this would be the logical next step in european integration. increase potential growth allow me to conclude. we have taken a closer look today at the causes of our non - standard monetary policy. weakening global growth and a generally lower natural interest rate lead to low and even negative market rates so that investment and consumption become more attractive. in the medium term we are thereby aiming to get inflation back to a level in line with our mandate to ensure price stability of below, but close to, 2 %. without our measures, the euro area economy would probably have slipped back into recession, with an increased risk of deflation. so we had to act, and this prevented things from getting worse. our analysis shows that the measures have been effective. the euro area economy is recovering, albeit more slowly than expected,

loans. when banks ’ share prices fall, their cost of equity increases, which could then reduce the net return on lending. this may cause banks to become more conservative in their lending in future and to raise the cost of lending. internal calculations have shown that a decline of around 10 % in a bank ’ s share price reduces corporate lending by around 0. 5 percentage point. together with other factors, such as the still high share of non - performing loans in the balance sheets of some banks as well as regulatory challenges, this could have a negative impact on the economic recovery in the euro area. we are therefore monitoring developments in this area very closely. what we have to avoid, however, is that banks are kept alive artificially, because in the long term this would only damage the economic recovery, as we have already seen in japan. moreover, “ palliative medicine for banks ” is simply not one of the tasks of a central bank. some banks have failed since the financial and economic crisis. we have reacted to this in europe through measures such as the comprehensive assessment of the banks that the ecb has been responsible for supervising since 2014. the bank recovery and resolution directive ( brrd ) establishes a uniform approach for dealing with failed banks in the eu, whereby losses have to be borne first and foremost by owners and creditors, and not by taxpayers. banks that are being wound down are no longer of any use to the real economy : they don ’ t grant any new loans or take deposits, and their activity in the money market is limited. such banks can no longer transmit our monetary policy impulses to companies and households. they should then not be drip fed by the central bank but should find other forms of refinancing. the introduction of the brrd and other rules represents considerable progress, and makes our financial system more stable. but we must now apply these rules consistently and avoid exceptions wherever possible. the inconsistent application of new rules to existing practices could expose the eurosystem to unnecessary risks. for example, the ecb ’ s “ general documentation ” explicitly states that asset management vehicles ( amvs ) resulting from a resolution - related separation of banks through the application of, for example, the brrd are not eligible counterparties for ecb refinancing. however, entities that do not have the legal status of amvs but act as wind - down entities as well as those that were created before the implementation of the brrd are eligible. the various expert committees of