euro area economy. fiscal measures taken in response to the pandemic emergency should as much as possible be targeted and temporary in nature. the three safety nets endorsed by the european council for workers, businesses and sovereigns, amounting to a total of €540 billion, provide important funding support in this context. the governing council also strongly welcomes the next generation eu package of €750 billion, which has the potential to significantly support the regions and sectors hardest hit by the pandemic, strengthen the single market and build a lasting and prosperous recovery. in order to fully reach its potential, the package will need to be firmly rooted in sound structural policies conceived and implemented at the national level. well - designed structural policies could contribute to a faster, stronger and more uniform recovery from the crisis, thereby supporting the effectiveness of monetary policy in the euro area. targeted structural policies are particularly important to revitalise our economies, with a focus on boosting investment in priority areas such as the green and digital transitions. we are now ready to take your questions. 3 / 3 bis central bankers'speeches

ready to withdraw liquidity when upward risks to medium - term price stability materialise. right now transmission channels are obstructed for two reasons, one conjunctural and one essentially structural. the conjunctural reason is that sovereign spreads in some peripheral countries, which are today the basis for the pricing of bank funding, can rise above what fundamentals would suggest, as they reflect various concerns felt by market participants, from over - pessimistic views of macroeconomic trends to redenomination risk. the correlations between the yield levels of euro area bank bonds and those of the respective banks ’ sovereigns are elevated and have lately increased somewhat further, particularly in the peripheral economies. this has also been the case for credit default swaps. this reflects a spillover effect from the sovereign market to the banking sector ’ s funding costs and impairs the transmission of lower monetary policy interest rates to the real economy. in response, the ecb has announced the outright monetary transactions ( omts ) – interventions on sovereign bond markets to repair the transmission channel when the level of spreads hampers monetary policy transmission and reflects market ’ s perception that the single currency might break up. omts would be implemented to the extent that they are warranted from a monetary policy perspective for countries under an efsf / esm macroeconomic adjustment or precautionary programme, as long as programme conditionality is fully respected. imf involvement will also be sought. omts would not be carried out while a given programme is under review, but they would resume after the review period once programme compliance has been assured. the announcement of the omts has reduced concerns about the materialisation of destructive scenarios. but it is essential that governments continue to implement the necessary steps to reduce both fiscal and structural imbalances and proceed with financial sector restructuring measures. the structural reason that the transmission channel is malfunctioning is the tight link between sovereign and bank funding conditions. the risk that banks ’ balance sheets would be contaminated by sovereign risk was highlighted at an early stage by barry eichengreen and charles wyplosz ( 1998 ). 1 if banks are to transmit monetary policy impulses evenly, they need broadly similar funding conditions. however, if the ultimate responsibility for the stability of the banking system falls within the domains of individual sovereigns, clearly the two are linked and when one of the two becomes riskier, this risk is transmitted to the other. hence the need to sever this