and bear higher risk weights – they will simply put their money elsewhere, and fund growth in other asset classes that are not being treated so strictly but where investment may not be, from a macroeconomic perspective, as desirable. there are of course other barriers to the securitisation market not addressed in my remarks, for example the somewhat - arbitrary imposition of caps on abs ratings by certain credit rating agencies, which are becoming increasing untenable, not only view of asset performance but also because of structural reforms in the euro area institutional structure, not least banking union and the single resolution mechanism. in addition, the liquidity coverage ratio also leaves out some abs types that could have been included in my view, however taking a step back it seems that an appropriate capital treatment is more important to achieve right now, because with too - high capital requirements european abss are unlikely to be created in the first place, much less traded. conclusion let me conclude. we have seen that sme abss can play a key role in bridging the gap between deleveraging banks and investors seeking to diversify their portfolio. there is growing recognition that, first, european securitisation instruments had a far better performance than their us bis central bankers ’ speeches counterparts and, second, significant policy improvements have been made which deem the regulatory calibration based on the worst performing global transactions and assets as inappropriate. yet the potential for sme abss to provide some funding relief for smes is limited in part by the current proposals to overhaul the securitisation credit risk framework, and is also limited by level playing field issues within eu regulations and proposals. it is not too late to change course : not all eu securitisations deserve the stigma attached to them for the past few years. there is a need to restore coherence across financial sectors in particular amid the unfavourable regulatory treatment of ( high quality ) securitisation instruments without violating prudential principles. by doing so we must act fast and in a manner that is sensitive to our own european reality. if the bank of england and the ecb were to put forward a joint statement on this issue at the forthcoming imf spring meetings, it would underline the european determination to decisively move forward. bis central bankers ’ speeches

inflation outlook has increased, remaining uncertainties still warrant patience, persistence and prudence with regard to monetary policy. an ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up and support headline inflation developments over the medium term. accordingly, our net asset purchases are intended to run at the current monthly pace of €30 billion until the end of september 2018, or beyond, if necessary, and in any case until the governing council sees a sustained adjustment in the path of inflation consistent with its inflation aim. furthermore, the ecb will continue to reinvest the principal payments from maturing securities for an extended period of time after the end of the net asset purchases, and in any case for as long as necessary. finally, the governing council continues to expect the key ecb interest rates to remain at their present levels for an extended period of time, and well past the horizon of the ecb ’ s net asset purchases. the condition and resilience of the euro area banking sector has continued to improve. the aggregate common equity tier 1 ratio of significant institutions in the euro area stood at 14. 3 % at the end of the third quarter of 2017, up from 13. 7 % a year earlier. euro area banks also saw their profitability improve in 2017, in part supported by the robust economic expansion and the limited cost of risk. continued efforts to address non - performing loans ( npls ) resulted in an 1 / 2 bis central bankers'speeches overall decrease in the npl ratio for banks under ecb supervision from 6. 5 % to 5. 2 % in the third quarter of 2017. notwithstanding these positive developments, a number of structural challenges continue to dampen banks ’ profitability prospects. these include, to varying degrees across countries and banks, cost inefficiencies, excess capacity and a lack of income diversification, while npls still remain high in some countries. in this context, a comprehensive action plan for dealing with legacy asset quality issues has been adopted by the council of the european union and is now being followed up by eu and national authorities. the ecb has published guidance to banks on npls, including its supervisory expectations for the prudential provisioning of new npls. furthermore, in cases where level 3 assets are material for specific banks, we continue to devote significant attention to potential valuation issues through both our off - site and on - site supervisory processes. with respect to financial stability more broadly, the economic recovery has improved the