attract foreign direct investment ( fdi ). one way to do that is by completing quickly privatization projects which are at a mature stage, as well as stepping up the pace of the overall privatization and real estate development programme. fdi, besides closing the investment gap, promotes greater trade ties with countries and companies with cutting edgetechnologies. this will allow integration of greek companies into global value chains, increasing openness of the economy and improving both the quantity and quality of greek exports. 8. supporting the unemployed and enhancing employment and training programmes. with unemployment at very high levels, it is essential to provide immediate support to the unemployed and those marginally attached to the labour market by using active labour market policies and targeted social transfers to counter temporary income losses and shorten job transitions. in the medium term, emphasis should be placed on skill upgrading and retraining policies to get people back into work. 6. final remarks a major issue in the coming months is the consolidation of confidence and the improvement of the country ’ s creditworthiness, which will allow the return of the greek sovereign to financial markets on sustainable terms after the end of the programme in august 2018. the steps that will make an effective contribution in this direction are : • first, the implementation of the reform and privatization programme and the preparation for the timely conclusion of the fourth and final review, which will mark the end of the programme ; • second, the specification of medium - term debt re - profiling measures, which will enable greece ’ s access to bond markets on sustainable terms and will facilitate the inclusion of greek government bonds in the ecb ’ s quantitative easing programme. 5 / 7 bis central bankers'speeches • third, the complete lifting of capital controls, in connection with the improvement of the economic outlook and depositors ’ confidence in the greek banking system. new bond issuances, while still in the esm programme, coupled with the forthcoming esm disbursements ( in line with the june 2017 eurogroup commitment ) could be used to build up a cash buffer to support investors ’ confidence and facilitate greece ’ s market access. such a cash buffer would be particularly useful in the event that greece ’ s credit rating has not improved to investment grade by the end of the programme in august 2018 ( currently, five notches lower ). however, notwithstanding the existence of a cash buffer to consolidate confidence over the medium term, it is important to clarify the environment in which the greek economy will move after the end of the

challenges ahead a side effect of the three - year ltros is that the banking system in the euro area is now in a situation of abundant excess liquidity. “ excess liquidity ” ( defined as the difference between outstanding open market operations and the liquidity needs from autonomous factors and reserve requirements ) currently stands at around €800 billion and is expected to remain at roughly this level at least until the end of january 2013, when banks will be able to exercise the option of early repayment on the first three - year ltro. the leeway for a reduction in outstanding refinancing operations before that date currently amounts to around €100 billion, and the scale on which banks will exercise early repayment options is difficult to anticipate at the current juncture. as a consequence, the balance sheet of the eurosystem has grown to €3 trillion. this large increase is a symptom of malfunctioning money markets and reflects the fact that the eurosystem has replaced much interbank activity. when the situation stabilises and money markets go back to functioning normally, the balance sheet of the eurosystem will also go back to its normal size. to this respect, the eurosystem is often compared with other major central banks. such comparisons however disregard the initial size of balance sheets, as the eurosystem holds a large volume of assets that have nothing to do with monetary policy. in early march, the ratio of monetary policy instruments to regional gdp was 15 % for the eurosystem, 19 % for the federal reserve system and 21 % for the bank of england. this large amount of excess liquidity has drawn criticism of two different kinds. some observers have argued that since banks are re - depositing with the ecb large amounts of liquidity, the injected liquidity is not circulating within the system and therefore the ecb ’ s actions will be ineffective in preventing deflationary pressures. others, however, have warned that since these large amounts of excess reserves may remain in the system for a relatively long time, if they are not appropriately absorbed they will hamper the ecb ’ s ability to keep inflationary pressures in check. these fears are of course contradictory. in order to dispel them, let ’ s look more closely at the channels of transmission through which the excess liquidity circulates in the system. the first criticism – that large - scale use of the deposit facility demonstrates the ineffectiveness of ecb ’ s measures –