storm to pass. in fact we have already done a great deal : the interest rates are at a historic low, the banks have access to unlimited liquidity, the collateral regime has been loosened several times, the ecb has already purchased government bonds and covered bonds. the eurosystem has taken a whole range of steps, but we must not ask too much of monetary policy. ecb president mario draghi has said explicitly that the euro is irreversible and ruled out a return to the drachma or the lira. is it the ecb ’ s job to maintain the euro area and the euro in their current form? our job is to maintain the euro as a stable currency within our mandate. we cannot and must not dispute political decisions regarding the composition of european monetary union. the central banks were not the ones who decided which countries would adopt the single currency. only democratically elected bodies can make those kinds of decisions. so the ecb ’ s financial stability mandate does not mean that it has to do everything in its power to save the euro? there is of course a close link between monetary and financial stability. even so, price stability takes clear precedence for the ecb – it is our primary objective. our financial stability mandate is secondary to this aim and is not a blank cheque. central banks themselves cannot guarantee some of the conditions which allow them to fulfil their tasks ; these conditions must be ensured by the governments of the member states. the central banks ’ mandate also has its limits in this context. if the ecb had not set up the government bond programme and politicians had done too little to remedy the problems, causing the crisis to escalate, wouldn ’ t the ecb have had to intervene anyway to stabilise the financial system? i don ’ t believe that the system would have collapsed if the ecb had not set up the government bond programme. in the past, many euro - area countries coped with yields of 7 % or more – not just for new bond issues but also on average. today, the affected countries could likewise ride out higher yields on new issues for a certain length of time. in the present bis central bankers ’ speeches situation, it is vital to do what is necessary to ensure that investor confidence improves and risk premiums fall. we have to ask ourselves whether central bank bond purchases create the right incentives. the rescue packages can help us to buy time where necessary. that sounds like an argument for the kind of

that, in turn, undermines the credibility of monetary policy. if the central bank moves into that kind of territory, it could become ensnared by its own policy and forfeit some of its credibility. why were you unable to convince the other governing council members with those arguments? most of my colleagues were evidently convinced that these concerns, while justified, could be addressed by designing the programme appropriately. they certainly did take my arguments and concerns on board – even though my overall assessment of the programme still ultimately differs from theirs. ecb president mario draghi has cited disruptions in monetary policy transmission as the reason for setting up the new programme. that does indeed seem to be a problem ; the ecb ’ s most recent interest rate cut failed to reach some euro - area countries. do you also believe that there are disruptions in the monetary policy transmission mechanism? bis central bankers ’ speeches we have been hearing that argument ever since the first government bond programme was launched in 2010, and yet we are still talking about disruptions in the transmission mechanism today. so my question is : faced with structural problems such as a lack of competitiveness and a loss of confidence in some countries ’ public finances, are government bond purchases really the right tool for repairing the monetary policy transmission mechanism? but you agree with the diagnosis? our monetary stimuli are still being transmitted, but our monetary policy is not currently reaching all euro - area countries in equal measure. that fact is connected, not least, with the lack of credit demand in some countries and the deleveraging process in their banking systems. yet these adjustments are all appropriate and necessary to enable these economies to stand on their own two feet again. do government bond risk premiums actually reflect the fundamentals at all any more or are they partly down to the irrationality of the markets? ideas about what is a fair interest rate level based on the fundamentals differ very widely and have a large subjective component. however, i wouldn ’ t say that the markets ’ actions are completely irrational at present ; they are based on concerns that the reforms in some countries could grind to a halt. these reforms and, above all, the question of whether they will actually be pursued in the future have a major impact on the growth outlook and thus also on credit risk. so it would be best for the ecb to do nothing, to simply wait for the storm to pass? not making government bond purchases certainly wouldn ’ t imply that the eurosystem was merely waiting for the