the continuing relevance of this market is the divergence in the prices for german, italian and spanish government bonds. another criticism is that the ecb defers problems rather than solving them. owing to the low interest rates, cheap credit is even available to firms that are no longer competitive, and would otherwise have gone under long ago. these zombie firms tie up capital and employees, all of which is harmful to economic efficiency. we have only bought corporate bonds with high ratings. this has indeed improved financing conditions predominantly for the companies in question, but also indirectly for the firms with lower credit standing. however, banks lending to companies must take the risk involved into account in their financing conditions. so, basically, the higher the risk, the more expensive the loan. moreover, european banking supervision requires more capital to cover the risk and looks very closely at credit standards. and indeed : not every group in the euro area can borrow for five years at less than 3 % interest. there are differences not only across countries, but also across firms within the individual countries. the role of government debt is now the subject of heated international debate. one argument that comes up more and more often is that the significance of debt has been systematically overestimated. large countries with their own central banks have no need to worry. japan and the united states, two countries that are highly indebted but nonetheless pay low interest rates, often serve as examples. that is impossible in the euro area, for purely legal reasons if nothing else. we have set maximum limits on the member states ’ levels of deficit and debt. and the ecb cannot buy government bonds on the primary market, for example bonds which other market participants no longer want because of, say, doubts about the sustainability of a country ’ s debt. we can only purchase government bonds on the secondary market to a limited extent and only if such a purchase is absolutely necessary to maintain price stability. these are the legal conditions. and what are the economic ones? in the recent debt crisis we had a front - seat view of what happens when individual countries build up too much debt. these states lose the confidence of market participants and their access to credit, or can only borrow at extremely high rates of interest. moreover, i think we have to reflect 2 / 3 bis central bankers'speeches on the burden we are leaving to other generations. you can ’ t keep on building up debt, sooner or later you will have to repay it. but you are not putting it correctly.

has become too strong – and is partly why european banks are so weak compared with their us peers. do you think that ’ s true? the profitable us banks are in any case leaving european banks further behind. i find that idea quite amusing. conversely, it means that the weaker the supervision, the stronger 1 / 4 bis central bankers'speeches the banks. the truth is that strict supervision leads to strong banks. institutions become more resilient when supervisors require them to hold adequate capital to cover their risks and insist on sufficient liquidity and better risk management. the us institutions received comprehensive state aid during the crisis. and now the united states is even rolling back regulation. both of these represent a disadvantage for domestic banks. up to now, the us authorities have generally only revoked rules that went beyond international standards. but you do have a point. it ’ s important that large international institutions meet the same standards, particularly in trading. that is why we need to have the new basel rules implemented in all major financial centres. moreover, let ’ s not forget that the united states managed to quickly return to a growth path. that has of course been of great benefit to the us banking system too. we were much slower in that regard, also in tackling structural problems. one outcome of the financial crisis was the ecb ’ s controversial asset purchase programme. the governing council has indeed decided to stop purchases, but only very slowly. meanwhile german social security funds have been suffering enormously from the negative interest rates for a long time. shouldn ’ t you be moving more quickly? ending the asset purchase programme is a major first step. but i agree that the side - effects of an extraordinarily loose monetary policy increase over time and i have pointed that out repeatedly. but after pursuing such an expansionary monetary policy, it would be wrong to now move abruptly in the other direction. that wouldn ’ t help either the economy or price stability. but rather? i am very much in favour of normalising monetary policy. that implies that we should gradually increase interest rates again. however, we can only do that if we are on a sustainable path towards price stability. moreover, we should not forget that the social security funds would be in a much weaker financial position today if economic growth had been held back by very tight monetary policy and higher unemployment. and german savers too sometimes forget that they can only save if they have a job. the trick therefore is to move steadily towards the exit without disrupting