all great statesmen – the ability to take others with him. he brought these same three qualities to bear in the design of economic and monetary union some years later. his voice carried particular weight in the decision to add the stability and growth pact to the architecture of monetary union. against considerable resistance in some corners, his advocacy ensured the euro was born within a framework for fiscal discipline. this was visionary, because the pact was more than just a set of rules. what theo waigel understood is that a union of separate nations, with different histories, traditions and cultures, but bound together by common interests and common needs, could only be built on mutual trust. bis central bankers ’ speeches trust was the key ingredient for countries take further steps towards integration without fear of moral hazard. but trust had to be earned. first, by countries showing that they accepted the shared responsibilities that monetary union creates. and second, by converging towards similar levels of income, which would assuage fears of a future “ transfer union ”. theo waigel ’ s insight was to see that the stability pact could achieve both. responsibility would be demonstrated by compliance with the rules that had been agreed by all. and compliance would lead to greater stability, higher growth and ultimately faster convergence. when the pact was agreed in the late 1990s, it was in a climate of optimism and prudence where this expectation seemed feasible. fiscal discipline had spread through the euro area as countries prepared for membership. and the addition of the single currency to the single market was expected to lead to a rapid narrowing of differences between richer and poorer members. but the reality was of course different, and convergence was slower than we thought – at least sustainable convergence that did not unwind with the bust. this was in part due to a lack of conviction among euro area countries that compliance with the rules would generate jobs and growth. it was in part due to a lack of determination in applying those rules. and it was in part due to external factors, namely the global financial crisis. fundamentally, the culture that should have underpinned trust – of responsibility leading to solidarity – needed to be stronger. and without that, as theo waigel foresaw, our monetary union was more fragile than it should have been. so today we face a choice – between leaving things as they are and moving forward. and this is not a choice without costs. we have seen that the price of inaction is high. we have seen how it leaves the economy vulnerable to instability

repo rates for transactions using specific collateral – which are driven by the need to source a specific security – have increased by slightly less than 50 basis points as collateral scarcity has implied some downward pressure on these rates. this collateral scarcity is reflected in persistent negative spreads of some short - term repo rates to €str, which is particularly pronounced for the nongeneral collateral ( non - gc ) rates ( chart 2 ). chart 2 average spread of short - term repo rates to €str over 2022 ( basis points ) sources : brokertec / mts and ecb calculations. notes : gc refers to general collateral and cash - driven repo transactions. non - gc refers to non - general collateral and collateral - driven repo transactions. the chart displays the average spread of the respective repo rate to the €str since the beginning of 2022. the latest observations are for 13 september 2022. moreover, there has been a widening of the spread between short - term government bill rates and swaps with the same maturity ( chart 1 ). this can be mainly attributed to demand / supply imbalances in the market for short - term government bills, which is partially driven by the level of excess liquidity and increased demand for short - term high - quality assets. this increased demand is also motivated by the current interest rate uncertainty and high level of volatility. these demand / supply imbalances of highquality collateral with short - term maturities can also be observed in other jurisdictions of major central banks for similar reasons. the increase of the dfr by 75 basis points to 0. 75 per cent that we decided last week will only become effective with the start of the new maintenance period today. to preserve the effective transmission of last week ’ s rate hike by 75 basis points and safeguard the orderly functioning of money markets, the governing council also decided last week to temporarily remove the zero per cent interest rate ceiling for remunerating government deposits held with the eurosystem. until 30 april 2023, the remuneration ceiling government deposits will remain at the €str or the dfr, whichever is lower. this temporary adjustment was in recognition that the faster than initially expected pace of monetary policy normalisation gave only little time for government deposit holders to adjust and plan for alternative arrangements. the temporary adjustment allows the remuneration of government deposits to follow money market rates, which reduces the risk of an abrupt outflow of these deposits