less accommodative monetary policy. furthermore, prices are going up and the risk of deflation is universally considered to be very low. at the same time, the marginal benefit of further purchases is steadily declining, with market participants already bracing themselves for a certain degree of “ normalisation ". it is for the ecb governing council to decide when and how such a course of normalisation will take place. i cannot, and would not wish to, speculate on this matter. but i would like to stick to outlining what could happen from a technical point of view if the ecb governing council were to decide that the time had come to normalise monetary policy. this means that the eurosystem in a first step would decrease its net asset purchases – not in one fell swoop overnight, but with clear prior warning and gradually. 3 / 4 bis central bankers'speeches note that tapering net purchases isn ’ t about scaling back the high level of excess liquidity that has been built up as a result of asset purchases and – mainly targeted longer - term – refinancing operations. it ’ s about curbing the growth rate of central bank money or, in other words, slightly reducing the monthly amounts additionally provided. taken by itself, tapering net purchases is not a restrictive monetary policy tool. quite the opposite : as long as additional net purchases take place, the already accommodative monetary policy is loosened even further. and even if net purchases were discontinued, monetary policy will remain expansionary. concerning the impact of the purchase programme, it is ultimately the stock of assets in the eurosystem ’ s balance sheet which is essential, and less the flow of monthly purchases. given that reinvestments of the principal payments from maturing securities purchased under the asset purchase programme take place, the stock of securities held by the eurosystem will not be reduced for the time being. as a consequence, and taking into account other monetary policy instruments in place, the monetary policy stance of the eurosystem will be accommodative for a long time to come. the banking sector would, all other things being equal, still have far more central bank money than actually needed for several years. given the abundant supply of central bank money, it can ’ t be the money market that is primarily to blame for many people ’ s concerns about tapering. what is it, then? tapering is suspected of triggering greater volatility and yield increases in

this requirement, paired with common supervision, would prevent a situation in which governments continue to receive cheap credit despite budget difficulties, thereby plunging not just themselves but also the banks into even greater budgetary problems. the importance of setting the barriers higher in this respect is illustrated by current developments. it ’ s the done thing nowadays to criticise the close interrelationship between public finances and national banking systems. yet individual countries, despite being financially strapped, are still encouraging domestic banks to buy more and more of their own government ’ s bonds. this is a good example in that it clearly illustrates how short - term attempts to combat the crisis are not compatible with what is needed in the long term. 5. conclusion ladies and gentlemen, let me summarise. if properly structured, a banking union can be an important building block, or even a pillar, of stable monetary union. but is it also the key to solving the crisis? no, it is not, and to expect that would be to demand too much of it. the banking union is a future - oriented concept whose purpose should be to help prevent future risks or at least to help deal with them better. however, the present problems affecting the banking system are the result, above all, of past undesirable developments at the national level. the risks in the balance sheets arose on the watch of national authorities, and the respective member states have to deal with them. this is the only way to maintain a balance of liability and control. to communitise these legacy burdens through a banking union would run counter to the purpose the banking union was established for : it would then constitute a financial transfer. if policymakers believe that transfers of this kind are necessary, then they should also refer to them as such. in some countries, national fiscal policy could certainly bear the balance sheet legacy burdens ; in bis central bankers ’ speeches other cases, the rescue mechanisms would be at the ready to grant conditional financial assistance. what is more, the expectation that legacy problems can be passed on to the future banking union and, therefore, to the other member states threatens to protract the reform process in the banking system. this is because it could then be worthwhile for those affected to put off cleaning up banks ’ balance sheets until the banking union is in place. but since the banking union is a concept for the future and because it cannot, moreover, solve the current crisis, it should be introduced quickly but not over - hastily. from