stress by giving them unlimited access to central bank money at a fixed price against adequate collateral. to facilitate this support, we expanded the set of eligible assets that can be used as collateral and extended the maturity of our lending. it is widely recognised that these measures have been effective in averting a disorderly spiral of deleveraging in the banking system, which would have taken place in an environment of severe liquidity constraints and fire sales. this was necessary in order to avoid deflationary downward pressures that would have prevented us from delivering on our mandate of preserving price stability in the euro area. however, to mitigate the crisis we have also had to go beyond liquidity support, in particular to counter financial fragmentation in the euro area – created by the adverse feedback loops i described above – that was disrupting the transmission of monetary policy across the euro area. diverging credit conditions by countries, by sectors and by size of companies have prevented the ecb ’ s very accommodative monetary policy stance from being passed on evenly in the financing conditions faced by euro area firms and households. as the euro area economy relies heavily on bank credit, this has serious implications for growth and ultimately for our ability to maintain price stability. in particular, in the first half of last year we perceived a situation last year where severe upward pressure on sovereign yields was being driven by unfounded fears about the future of the euro area. these fears were causing investors to charge risk premia to lend to some member states that could not be justified by economic fundamentals. we therefore decided to open the possibility of undertaking outright monetary transactions ( omts ), entailing ex ante unlimited interventions in short - to medium - term securities issued by governments which have submitted to strict and effective conditionality, in order to eliminate the pricing of un - warranted tail risks in the bond markets. this has played an important role in reducing financial market fragmentation, as financial markets understood omts as a credible backstop for countering redenomination risk. 2. what remains to be done these measures by the ecb, however, can only buy time ; they cannot substitute for the responsibilities of national governments to address the unsound fiscal, economic and financial policies that are the root causes of the crisis. and while a great deal has already been done by euro area authorities to address these root causes, there are three areas in which more progress still needs to be made. first, the euro area needs to continue to deepen

since the publication of the report, the banking sector has subscribed to the eurosystem ’ s objectives in principle. it has begun to cooperate closely with the eurosystem in order to identify the practical impediments to the achievement of these objectives, and in order to investigate and, where possible, agree on effective solutions. i fully share the european parliament ’ s concern that very little progress has been visible to customers. however, there are rather strong indications that banks are making considerable efforts to prepare the ground for a more efficient handling of cross - border credit transfers. in particular, progress is under way in the areas of standardisation and simplification of the balance of payments reporting requirements. the ecb will prepare a progress report by autumn 2000 in which it will update its assessment. the eurosystem would prefer to maintain its present stance of cooperation but, if necessary, will step up the pressure on the banking sector. however, it would be unrealistic to expect the service level for cross - border payments to reach that of domestic payments in all respects by 2002. let me close by emphasising again that the introduction of the euro has indeed been a milestone in the ongoing process of european integration. the ecb, as the guardian of the single currency, shall continue to pursue its stability - oriented monetary policy in order to fulfil its mandate and to deliver the policy results that european citizens rightly expect.