to some extent by the use of ccps, while the second issue relates to “ the inefficient use of ( high - quality ) collateral due to constraints within repo clearing and settlement arrangements ”, which is being addressed via collateral optimisation initiatives. a ) role of central counterparties ( ccps ) ccps play a major role in reducing counterparty risk, thereby mitigating the potential risks associated with the drying - up of funding sources. first, as independent clearing agents, ccps are well positioned to offer effective protection against counterparty risk through the application of consistent margin requirements to a wide range of counterparties and through see t. v. dang, g. gorton, and b. holmstrom, “ financial crises and the optimality of debt for liquidity provision, ” working paper, november 2009. speech by benoit cœure, at the joint ecb - mnb conference on “ cost and efficiency of retail payments : evidence, policy actions and role of central banks ”, budapest, 15 november 2012. https : / / www. ecb. int / press / key / date / 2012 / html / sp121115 _ 2. en. html. bis central bankers ’ speeches multilateral netting and risk sharing. second, ccps also provide enhanced transparency for the markets they serve, which in turn facilitates appropriate risk management and may also help to reduce excessive leverage. third, as a result of multilateral netting, ccps may also free up collateral. 12 overall, provided that it is well - managed and in line with applicable regulatory and oversight requirements, a ccp can be expected to guarantee trade execution under a wide range of market conditions, including extreme or exceptional scenarios. this supports trading also at times of distress when uncertainty and risk aversion may disrupt activity and exacerbate volatility in markets. given the benefits of central clearing for market resilience and financial stability more broadly, the ecb welcomes the overall increase in the share of transactions that are cleared through ccps. it also supports the execution of repo transactions via ccps. in europe, market incentives seem sufficiently strong to favour use of ccps, and we would not see a need at the current juncture to advocate regulatory action to impose central clearing of repos, as has been the case for otc derivative transactions. at the same time, an expanded use of ccps should be accompanied by effective supervision and oversight, which always needs

rates have sparked a remarkable public debate. in many advanced economies, they have exposed central banks to severe criticism and have even called into question the paradigm of modern independent central banking. in the euro area, the coincidence of low inflation and low interest rates has led to opposing views. for some, the ecb is doing too little too late to lift inflation. others blame the ecb for “ expropriating ” savers and propping up “ zombie ” firms. 1 there is an evolving understanding that some of these arguments may not properly reflect reality. in particular, it is increasingly appreciated that central banks have only a limited impact on the long - term trends that shape the interest rate environment in which the economy operates. these trends are, by and large, determined by the willingness of households and firms to save and invest. in this context, central banks often point towards the “ real equilibrium ” interest rate 1 / 4 bis central bankers'speeches that balances savings and investments. and over the past few decades, slow - moving structural factors, such as lower trend productivity growth, an ageing society and global excess savings, have together led to a measurable decline in that interest rate. just as an example : annual productivity growth in the euro area in the 1980s was, on average, around 2 %. today it is less than half of that. this decline in the real equilibrium interest rate has two broad consequences for the conduct of monetary policy. the first is that ever - lower interest rates are needed to stimulate growth and investment. this is because monetary policy is only providing stimulus if the short - term policy rate – adjusted for inflation – is below the equilibrium rate. current estimates suggest that the real short - term policy rate in the euro area needs to be negative for monetary policy to put upward pressure on prices. the second consequence is that years of weak aggregate demand and price pressures have forced central banks worldwide to find additional instruments that could provide policy accommodation when their main policy rates were approaching zero. in fact, the ecb has introduced a wide range of novel monetary policy tools in recent years, such as asset purchases and negative interest rates. there is a wealth of empirical evidence that suggests that these measures were not only necessary to fulfil our price stability mandate, but that they also had considerable positive effects on growth and employment in the euro area. 2 the changed interaction between fiscal and monetary policy so, monetary policy has not become powerless in the wake of the fall in the real equilibrium interest rate.