the interbank market at a rate that is below the main refinancing rate. suppose now the main refinancing rate is equal to the deposit rate. then there is no rate at which trade is possible. hence, it is important to keep a spread between the main refinancing and the deposit rate in order to support market activity. another benefit of lowering the deposit rate together with the main refinancing rate is that in the current situation with excess liquidity, short - term interest rates such as eonia track the deposit rate more closely than the main refinancing rate. 10 the banking system as a whole has excess liquidity, which currently stands at around € 130 billion. when the excess liquidity increases, rates fall since less must be borrowed in the interbank market ( the demand curve shifts down ). in order to make sure that the monetary policy accommodation is passed on to the interbank market under fixed - rate full allotment and excess liquidity, it is therefore not enough to lower just the main refinancing rate. in fact, the deposit rate may be the most important policy rate of a central bank in an environment of excess liquidity. the decision to lower rates, which was accompanied by a number of other measures to stimulate credit to the economy such as “ targeted ” long - term operations ( to induce banks to lend more to the real sector ) and an announcement of purchases of asset - backed securities and covered bonds based on claims on the euro area real economy, is also fully in line with the ecb ’ s forward guidance. forward guidance implies that interest rates remain at present or lower levels for an extended period of time conditional on an assessment of the economic outlook. following the june decision, the lower policy rates were transmitted well to the money market and, in line with forward guidance, market uncertainty about the expected path of policy rates fell. eonia forwards curves flattened and shifted down ( slide 2 ). in addition, the volatility of eonia rates as well as the option - implied volatility of short - term interest rates dropped. the lower policy rates were also transmitted to longer maturities and to market segments other than the unsecured money market. euribor rates and rates implied by euribor futures fell after the june decision and again after the september decision ( slide 3 and 4 ). unsecured money market interest rates are now negative for a maturity of up two weeks. besides,

background, the ecb will definitely follow - up on your request for further analysis. i do not exclude that we will conclude that there is a real case for enhancing the present framework which relies essentially on the vigilance of the financial institutions that are themselves under supervision as regards their counterparty risks on the hedge funds. but i also note that any such enhancement should be agreed upon at the level of the international community and, in particular, on the basis of an appropriate transatlantic discussion. as regards payment and settlement issues, let me first thank the european parliament for the support expressed for the implementation by november 2007 of the target2 system. being an integrated large - value payment system, target2 will provide for efficiency gains and improved liquidity management by banks. in this regard, i should like to refer to an increased pressure to also have an integrated platform for the settlement of securities transactions in euro. the eurosystem is therefore currently examining, in co - ordination with the european commission and in close co - operation with the market, the feasibility of setting up a eurosystem infrastructure for the provision of securities settlement services in central bank money. a decision on whether to offer such a service, referred to as “ target2 - securities ”, is expected in early 2007. in the field of retail payments, we strongly support the efforts to establish a single euro payment area ( sepa ). we welcome the eu commission ’ s initiative for a directive on payment services and i warmly welcome european parliament ’ s contribution to a swift adoption of this directive to assist the banking industry in their implementation of sepa payment instruments as from 1 january 2008. i thank you very much for your attention. i am now available to answer your questions.