purchase newly issued government bonds at certain times. furthermore, the central banks of the eurosystem observe the issuing behaviour of member states, banks and market players for signs of collusion. if, for example, a country were to convert all its bond issues to a short maturity ( of up to three years ), we would react. bis central bankers ’ speeches possible consequences of the ecb ’ s measures for national budgets the rapporteur has also asked us to address the possible consequences of our measures for national budgets. of course, conducting monetary policy will always be associated with risks. for this reason, central banks hold capital and set aside funds for provisions and reserves as a pre - caution. this adds to their financial independence. in view of the expansion in balance sheets in previous years and the added risks associated with this, the central banks of the eurosystem have further strengthened their financial buffers. by the end of 2012, funds for provisions had increased to €56. 5 billion and those for reserves to €76. 6 billion. the eurosystem is obliged to keep financial risks under control as best it can. the institutional framework for omts is therefore designed in such a way that risks for the eurosystem are manageable and controllable, for example through the aforementioned orientation of the programme towards short - term maturities. the risks associated with omts would materialise only if a member state operated un - sound policies and failed to service its debt. put simply, the mechanism according to which losses go into the profit and loss account applies to both the ecb and the national central banks. if a net loss remains even after taking into account all provisions and reserves, it could be recorded on the balance sheet as losses carried forward and be offset by any net income in the following years. it is important that it is understood from the principle of financial independence that a central bank needs to be adequately capitalised in the long term. but in no way does it follow from this that all losses carried forward would have to be offset immediately and in full by the capital holders or member states. conclusion to conclude, i would like to summarise my arguments. the announcement of omts was and is the necessary and appropriate step to eliminate the disruption in the transmission of monetary policy caused by concerns that there would be an unwanted break - up of the euro. the risks of not acting would have been greater. the ecb and its decision - makers are aware of the limits of

facility. you can see this on the right - hand side. non - bank and non - euro area entities are prepared to pay rates below the deposit facility rate, and below the rates offered by those with access to the facility, for two main reasons. first, because internal risk management rules restrict their choice of counterparties to those with the lowest credit risk. and, second, because alternative safe investments, such as short - term government bonds, are often even more costly. the changeover from eonia to the €str made visible the pricing impact of differences in who can hold central bank reserves. this also means that the €str is a better and more transparent indicator of prevailing market conditions than eonia, as it helps deliver a more comprehensive picture of the interactive effects of our actions and policy framework. but it also implies a possible risk that the €str might be less under our control than eonia was. changes in the €str are essentially a function of three main factors : the level of ecb policy rates, the level of excess liquidity and the distribution of this excess liquidity across sectors. all else being equal, a decline in the demand for liquidity services by non - banks – for example, due to a sudden increase in risk aversion – might lead to upward pressure on the €str at the same level of excess liquidity. also, a decline in excess liquidity can be expected to lead to faster upward pressure for €str, even in the absence of changes in policy rates. it is these factors that may be a cause of concern in the current context of interest rate volatility. but i would not be overly worried today for three main reasons. first, we are a long way from expecting any reductions in excess liquidity in the euro area. in fact, as of november, the ecb ’ s renewed net asset purchases of €20 billion per month will further increase excess liquidity. the governing council is committed to continue net purchases for as long as necessary to reinforce the accommodative impact of our policy rates, and to end shortly before we start raising the key ecb interest rates, which in turn will depend on inflation robustly converging towards our aim. even beyond the end our net purchases, we will continue reinvesting the principal payments from maturing securities for an extended period of time, which will keep excess liquidity abundant. second, the experience of the federal reserve has highlighted that