• benefiting from their rich and vast experience. the principle of decentralisation introduces a national anchoring that creates closeness to the local financial communities and the local general public. at first glance, the decentralised set - up with its checks and balances, might seem quite complex and one might wonder how it can work in practice. therefore, let us have a closer look at how the system functions and how it has evolved over the past ten years. opinion of the european central bank of 15 april 2008 at the request of the luxembourg minister for the treasury and the budget on a draft law improving the legislative framework for luxembourg as a financial centre and on a draft law relating to social insurance contributions ( con / 2008 / 17 ) ; opinion of the european central bank of 10 september 2008 at the request of the banque centrale du luxembourg on amendments to the draft law improving the legislative framework for luxembourg as a financial centre and amending the law of 23 december 1998 on monetary status and on the banque centrale du luxembourg ( con / 2008 / 42 ). in the eurosystem architecture the governing council has a decisive role as the main decision - making body within the eurosystem. its members, through their ad personam participation, are required to focus on the european perspective. the one - member / one vote principle guarantees that each member has to assess the interest of the euro area as a whole, instead of the interest of any particular country, a feature which makes the ecb very different from other european institutions, like the commission and the council. in that sense i will dare say that the eurosystem could be called one of the most truly european of all european institutions. let me add at this stage, in particular in current times of very high market tensions, it is of the essence to take decisions which reflect the collegial wisdom and expertise of all the members of the executive board and all the members of the governing council. in the present circumstances we have at times to decide rapidly and to have these decisions implemented timely, usually via the national central banks. as regards monetary policy since the start of the turbulences, let me stress once again that we have applied our “ separation principle ”. the eurosystem has been able to preserve medium - term confidence in price stability, in constantly designing the monetary policy stance to that end, whilst at the same time refinancing the commercial banks, with short - term rates close to policy rates, with a view to smooth

area as a whole. to the extent that risks materialise, appropriate macro - prudential measures at a country level can be implemented to limit their accumulation. moreover, in assessing the risks of excessive “ search for yield ” we should not forget that the quest for higher yields may also improve the scope for portfolio diversification. in the euro area, institutional investors certainly have room to better diversify their assets. according to recent estimates by the european commission, for insurance companies and pension funds, the portfolio share of equity instruments is around 10 percent, compared to more than 20 percent in the uk and almost 45 percent in the us. the other main concern for financial stability is that low or negative interest rates may have an adverse impact on the profitability of banks and institutional investors, ultimately putting their financial soundness at risk. in evaluating this issue we should take into account all the effects that low interest rates may have on the balance sheets of financial institutions. in the banking sector, the negative impact on interest income may be counter - balanced by a more favourable effect on other revenues : in addition to one - off capital gains on securities portfolios, an increase in fees and commissions from banking services and – given that low interest rates bring about an improvement in the economy and thus in borrowers ’ creditworthiness – a reduction in provisions. institutional investors may also benefit from a stronger demand for asset management services by households, due to the latter ’ s need to better diversify their portfolios, as well as from a broader range of investment opportunities thanks to corporations ’ greater demand for non - bank debt and equity capital. bis central bankers ’ speeches in the short term, the main risk derives, not least for financial institutions, from the persistently weak and uncertain macroeconomic outlook ; the most effective way to reduce this is to lift economic growth and employment. in the euro area, and in the other advanced economies that are still facing subdued activity and too - low inflation, this calls for economic policies to sustain aggregate demand ; improvements in the cyclical position will also facilitate the implementation of structural reforms needed to raise potential output and ensure a sustained economic recovery. non - standard monetary policy measures are especially effective in alleviating the contractionary consequences of economy - wide deleveraging in an environment in which nominal interest rates are hovering around the zero lower bound. we have clear evidence that the measures undertaken by the ecb governing council over the last two years have been effective. estimates, among others, by banca d