the interbank market peaked at more than 1. 8 percentage points. owing to the renewed sharp increase in banks ’ mistrust, the overnight money market also suffered heavily. further adjustments to liquidity policy were unavoidable under such circumstances. the transition to fixed - rate tenders with full allotment of all bids decided upon in october 2008, together with a widening of the collateral framework in our refinancing operations, ensured that all banks received the liquidity they needed at the interest rate deemed appropriate from a monetary policy perspective. the escalation of the financial market turmoil from mid - september onwards and the global shock to confidence led to a considerable change in the outlook for the real economy and price stability changed. against this background, the governing council of the ecb has lowered its main policy rate decisively since october 2008 from 4. 25 % to 1 %. moreover, given that very short - term rates are now at an appropriate level, the governing council decided at its meeting last week to implement further measures in order to fulfil its primary goal – that is, safeguarding medium - term price stability. these measures include the introduction of tender operations with a maturity of 12 months and outright purchases of covered bonds up to a maximum amount of €60 billion. the governing council will provide detailed information on the covered bond programme after its next meeting. such “ non - standard ” monetary policy measures extend the traditional monetary policy toolbox of the eurosystem. they reflect the bank - based nature of the financial system in the euro area – which implies that monetary policy impulses are predominantly transmitted through the banking system – by aiming to improve funding conditions for banks. all in all, the monetary policy actions and the rescue schemes for banks in stress have helped to stabilise the financial system at a time when systemic stability was at risk. thus, they have put a floor under the tail risk of a self - enforcing uncontrolled downward - spiral from feedback effects between the financial and the real spheres. however, monetary policy has created an enormous expansionary stimulus – not just in the euro area but also worldwide. while this stimulus is currently warranted, we have to keep in mind that it has to be reduced or even inverted very quickly as soon as the overall situation improves. the need for such a quick retraction of the expansionary stance stems from at least two factors. the first is that part of the monetary stimulus will remain in the pipeline for some time due

considerable headway. in particular the banking supervision committee set up at the newly established european central bank is taking due account of the greater necessity for co - ordination at the european level. notwithstanding this strengthened cooperation, banking supervision in the european monetary union will remain a national responsibility. that is in line with the principle of subsidiarity and takes due account of the greater effectivity of close - at - hand supervision that is able to respond rapidly to regional special developments. regarding the advantages of a close - at - hand supervision i can not see any current need for a centralised supervisory authority neither on the european level nor as a „ super agency ” or „ umbrella supervisor ” on the international level. co - ordination in the field of supervision has to be accompanied by harmonisation in the field of supervisory legislation. besides risk considerations, competitive factors argue in favour of harmonised provisions in the single european market for financial services. the objective must be to ensure a level playing field, and to prevent national supervisory regulations from being misused as instruments of competition policy by proven standards being relaxed solely in order to make one ’ s own financial centre more attractive. in this context one has to discuss as well, if and to what extent there is a need to extend international supervisory standards into offshore centers in order to make sure that financial players do not try to shift their business to such places with the aim of evading regulatory demands. national central banks, which either play an integral part in banking supervision ( as in germany ) or actually have the primary responsibility for all aspects of banking supervision ( as in greece ), are of outstanding importance in the field of banking supervision in emu. a weighty argument in favour of the participation of central banks in banking supervision is, in particular, their great proximity to the market, which they gain from their own participation in financial market operations as part of their lending business and through their performance of fiscal agent functions. this enables a central bank to advocate market - promoting deregulation measures, which are at the same time acceptable in prudential terms. furthermore, there are many points of contact / interactions between the duties of a central bank and those of banking supervisors. v within emu it will be essential for banking supervisors, on the one hand, to exploit the disciplining effect of fiercer competition by means of suitable approaches to regulation in order to strengthen the sense of responsibility of market players. on the other hand supervisors have to prevent excessive risk - taking on the part of particular