real economy. pandemic, the reserve bank activated the asset price channel through large - scale purchases of government paper through open market operations ( omos ) and the secondary market government securities acquisition programme ( g - sap ) 20. large purchases of government paper softened g - sec yields which, in turn, facilitated the lowering of yields, i. e., interest rates, on all instruments priced off the yield curve. 14. the pandemic - induced liquidity measures were unique in several ways : ( i ) liquidity was provided only through the reserve bank ’ s counterparties for on - lending to stressed entities / sectors ; in that sense, most of it was targeted and not open ended ; ( ii ) asset purchase programme ( g - sap ) was for a limited period of six months and much smaller in size than advanced economies, and was confined to government securities in the secondary market ; ( iii ) collateral standards were not diluted in lending facilities ; 21 ( iv ) loan resolution frameworks for covid - 19 related stressed assets of banks and nbfcs were not open ended but subject to achievement of certain financial and operational parameters ; and ( v ) most of the liquidity injection measures had pre - announced sunset clauses, which helped in an orderly unwinding of liquidity on their respective terminal dates without deanchoring market expectations. 20 with a view to improving monetary policy transmission and enabling a stable and orderly evolution of the yield curve, the reserve bank implemented a secondary market g - sec acquisition programme ( g - sap ) in april - september 2021 to anchor yield expectations in the context of the large borrowing programme of the government. the reserve bank purchased g - secs amounting to ₹1. 2 lakh crore under g - sap 1. 0 and ₹1. 0 lakh crore under g - sap 2. 0. 21 unlike in many advanced economies, the collateral standards on the liquidity facilities of the rbi were not diluted but was confined to central and state government securities only. global upsurge in inflation and monetary tightening cycle 15. in early 2022, inflation in india was expected to moderate significantly with a projected average rate of 4. 5 per cent for 2022 - 23. this was premised upon an anticipated normalisation of supply chains, the gradual ebbing of covid - 19 infections and a normal monsoon. such expectations were, however, belied by the outbreak of hostilities in ukraine in february 2022. initially, the shocks came from

have already pointed out earlier this week. in particular, common equity instruments are first in line to absorb any losses that occur. only after they have been fully used up would additional tier 1 ( at1 ) instruments be required to be written down. this approach has been consistently applied in past cases and will continue to guide the actions of the srb and ecb banking supervision in crisis interventions. 1 additional tier 1 – a market worth roughly eur 250bn – is an important component of the capital structure of european banks. lastly, on the market environment, recall what the ecb governing council emphasised one week ago. the eurosystem's toolkit is fully equipped to provide liquidity support, if needed, and to preserve the smooth transmission of monetary policy. in this context, you will have seen that the eurosystem has increased the frequency of providing 7 - day usd funding from weekly to daily as of this week. this facility, which is backstop - priced, is designed to enhance the provision of liquidity via the standing us dollar swap line arrangements between six major central banks. the take - up so far has been very limited, which is, of course, good news as banks can readily meet usd funding needs in the market. 3. inflation and implications for monetary policy 3. 1 inflation remains much too high now, let me turn to the actual topic of my speech : inflation. at almost 9 %, germany's headline inflation rate [ hicp ] last year was one of the highest since the foundation of the federal republic. february's rate of 9. 3 % – while lower than in the months before – is still far too high. in particular, the recent increase in core inflation - – that excludes volatile energy and food prices – is a concern. importantly, both headline inflation and core inflation in germany will probably remain above the 2 % - mark next year and possibly in 2025, too. the same holds true for the euro area, where ecb staff projections see core inflation rates averaging 2. 5 % and 2. 2 % in 2024 and 2025, respectively [ after 4. 6 % in 2023 ]. 3. 2 interest rates are the primary tool in our toolkit against the backdrop of high inflation, the ecb's governing council has pursued the fastest rate hiking cycle in the euro area's history. in less than a year, it has raised interest rates by a staggering 350 basis points. this underscores