and effective decisions in order to preserve favourable financing conditions and facilitate lending, on top of the measures already in place prior to the pandemic, including a zero interest rate on the main refinancing operations and a negative deposit facility rate. specifically, we decided to promptly introduce the pandemic emergency purchase programme ( pepp ) to play the dual role of stabilising financial markets and providing additional monetary accommodation. in terms of its first role, i. e. smoothing out financial shocks, the design of the pepp allows a high degree of flexibility in the composition of purchases, thereby ensuring the effective transmission of monetary policy across the euro area. more specifically, the monthly purchase volumes are not fixed but may vary over time depending on the prevailing financial conditions. also, while the benchmark allocation of public sector securities across jurisdictions is guided by the key for subscription to the ecb ’ s capital of each national central bank ( reflecting the size of its economy ), national central banks have been given the discretion to conduct purchases temporarily in deviation from that capital key. this flexibility helps to address impairments in the monetary policy transmission mechanism, as a result of investors ’ flight to safety amid 1 / 4 bis central bankers'speeches uncertainty, and to counter fragmentation risks in the euro area. why is flexibility so important for the effectiveness of the pepp? at the onset of the pandemic, some european countries were severely hit, while for some others the impact was comparatively milder. given this unevenness, the former group of countries faced heightened uncertainty, high volatility in their financial markets and a surge in their government bond yields. their yield spreads versus the latter group of countries, which saw milder increases in their yields, thus skyrocketed to high levels. purchases under the pepp, which were allocated relatively more towards bonds issued by harder hit countries, succeeded in drastically reducing those countries ’ government bond yields and spreads. as far as greece is concerned, a crucial role in the stabilisation of domestic financial conditions was also played by the waiver of the minimum credit quality requirements, applicable under the existing public sector purchase programme ( pspp ), which was granted for securities issued by the greek government, making them eligible for pepp purchases. this decision is a prime example of the efficiency related to the pepp ’ s flexibility : as soon as the programme was announced, the greek government bond yields declined sharply and now stand below their prepandemic levels. guided by the

philipp hildebrand : lessons from the crisis for global financial market infrastructure summary of a speech by mr philipp hildebrand, vice - chairman of the governing board of the swiss national bank, at the zermatt symposium, avenir suisse, zermatt, 25 august 2009. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * the financial market infrastructure, in other words, the systems for trading, clearing and settling payments and financial instruments, is essential for the operation of the financial system. thus far in the financial crisis, financial market infrastructure has stood up well overall and helped to prevent the existing uncertainty in the financial system from becoming even greater. this holds true both for payment and settlement systems in switzerland and for the global financial market infrastructure. however, time and again, it becomes apparent that the infrastructure for clearing and settling transactions is not keeping up with rapidly growing financial markets. in recent years, this has been most obvious in the otc derivatives market. pressured by supervisory authorities and central banks, market participants are now developing safer and more efficient clearing and settlement arrangements for otc derivatives. these efforts include the establishment of central counterparties, which facilitate market participants ’ risk management, promote market transparency and reduce the complexity of the financial system. to the extent that the market infrastructure reduces the interconnections between individual financial institutions, it contributes to the long - term strategy aimed at finding ways of liquidating large and complex financial institutions in an orderly way. from a regulatory perspective, it is important to note that responsibility for ensuring that payment and settlement systems work smoothly and meet the requirements of the financial industry lies with the system operators and market participants. the role of regulatory authorities is to establish certain guidelines, especially for infrastructures that are of critical importance for the stability of the financial system, and to intervene rapidly in cases where market forces do not provide an adequate infrastructure.