anchored at levels consistent with our definition of price stability. in the spirit of ludwig erhard, the ecb is making its contribution to the social market economy. the ecb ’ s response and instruments having the same objective does not necessarily mean using the same instruments. the ecb has inherited its objective from the bundesbank, but it is operating in a new and different environment. bis central bankers ’ speeches today ’ s economic and monetary union is larger and more diverse than a single country, such as germany. it is highly integrated but still at times fragmented. and it comprises a very large number of policy - makers on fiscal, structural and other economic matters. all policy - makers have to recognise that we belong to emu together and that policies as well as policy inaction create spillovers for other members. this is an enormous responsibility for governments and other economic policy - makers. for the ecb to operate in this environment, and to be responsible and effective in accomplishing its objective, we have to use a wide range of instruments. some instruments are standard, some non - standard, but all are based on the ecb statutes. the use of these instruments has been essential in safeguarding our objective during the financial and sovereign debt crisis. in the run - up to the crisis, inappropriate fiscal, structural and other economic policies fostered an excessive build - up of risk in the financial sector and created vulnerabilities on a global scale. when the crisis erupted, these vulnerabilities placed a heavy burden on central banks. in particular, the threat of a financial meltdown jeopardised their capability to counteract downside risks to price stability. the ecb acted on that threat according to our unambiguous mandate to deliver price stability. we have reduced our main policy rates to historical lows. this contributed to stabilising investment and consumption decisions in the euro area. our actions prevented a steeper fall in aggregate demand and ensured the conditions for stable prices in the euro area. in a bank - based economy like the euro area, monetary policy works through banks, and banks lend to each other, based on mutual trust. in the crisis, that trust got lost, and the banks no longer lent to each other. facing the threat of a euro - area wide funding crisis, they turned to the central bank. we, the central bank, provided liquidity to banks because we have to work through them. they are our counterparts – and we had to act

our disposal. but it would be confusing to highlight individual instruments now because the use of a given instrument depends on the situation. for example, we would react with completely different means if the money markets were to stall than if there were a setback in the economic situation. but the ecb has already pumped so much cheap money into the system and it is still not getting through to the markets. yes, it is. it is getting through to the markets very well. it is just that it is still the case that too little is getting through to the real economy. could negative deposit rates be an instrument that would help here? i do not want to speculate about individual instruments. any instrument may be used if the situation demands, including the one you mention. in several months ’ time, the ecb will take over supervision of large euro area banks. will we no longer see banking crises after that? since the outbreak of the financial crisis, banking regulation has made huge progress all over the world. in europe, approximately half a trillion euros of additional capital has flowed into the banking sector in the past three years alone, half of it from private sources. but i would never say that these improvements mean that there will be no more crises. nobody knows where the next crisis will come from. it is therefore important to make the financial system as a whole even more resilient. but are there not simply too many banks in europe? that is very hard to say. the ecb ’ s asset quality review of the banks that is currently being conducted pursues one goal in particular : we want to shed more light on bank balance sheets and therefore indirectly also on that issue. the markets and investors should know what state europe ’ s banks are really in. we want full transparency. only through transparency will investors be ready to provide additional capital for banks. bis central bankers ’ speeches yet this means that the ecb ’ s audit of the banks could itself become a systemic risk. if the ecb were to notice very large capital shortfalls or a large number of banks that are not capable of surviving, this would potentially trigger a new banking crisis. i see it completely differently. if there are problems in europe ’ s banking sector, they are there, regardless of whether we uncover them or not. in the financial system in general, light is always better than darkness. only by uncovering weaknesses in the banking sector can measures be taken to correct them, be it through recapitalisation, restructuring