sector securities on the secondary market, currency swaps, forward guidance, and much more. the effective functional independence of the eurosystem was demonstrated by the speed with which it deployed a panoply of unconventional measures in response to the crisis. the ecb was the first central bank to counter interbank market strains with injections of liquidity, totaling €100 billion already in august 2007. 15 after the default of lehman brothers, when the crisis reached a magnitude that prompted fears of the collapse of the entire global financial system, the ecb not only rapidly lowered its policy rates but also introduced fixed - rate, fullallotment auctions for central bank refinancing and broadened the range of assets eligible as collateral. in this way, as early as 2008 the european central bank had expanded its balance sheet by 60 per cent. 16 in 2009 and 2010, the severe disruption of financial systems produced by the crisis and the consequent recession were compounded, in europe, by the “ sovereign debt ” crisis of some euro - area countries. the revelation of the true state of the public finances in greece resulted in the collapse of international investor confidence – at first just in greece ; but then, in rapid succession, doubts arose over the sustainability of the public debt in ireland, because of the bursting of the real estate bubble there and the consequent banking crisis, and in portugal, given that country ’ s persistent macroeconomic disequilibria. beginning in the summer of 2011, following the announcement of the bail - in of private investors in the restructuring of the greek debt, the strains turned systemic and spread to spain, which was suffering a sharp contraction of the real estate market that impacted on the most exposed banks ; and lastly to italy, vulnerable for its large public debt and apparent inability to generate economic growth, even in the longer term. up until then, the illusion had prevailed that the eurosystem could conduct monetary policy simply treating the euro area as a single nation. the doubts voiced by some analysts about the logical consistency of such a model had been muted by the incontrovertible successes of a decade of single monetary policy. let me recall two of those expressions of doubt : tommaso padoa - schioppa ’ s “ currency without a state ” 17 and carlo azeglio ciampi ’ s “ limp ”. ciampi observed that “ at the very moment the euro was created, it was born with a limp, an as

giuseppe grande and fabio panetta ( 2014 ), “ the negative feedback loop between banks and sovereigns ”, banca d ’ italia, questioni di economia e finanza ( occasional papers ), no. 213. bis central bankers ’ speeches to studies by the bank of italy, the overall effect on italy ’ s gdp of the measures i have listed can be estimated at a little less than three percentage points in the two years 2012 – 13. 21 these measures also highlighted the operational autonomy of the eurosystem, which was able to bring a wide array of instruments to bear on the different manifestations of the financial crisis, selecting the most suitable one case by case. however, the success of the ecb ’ s extraordinary measures must not make us forget the difficulties that monetary policy in the euro area has faced in recent years. the global financial crisis and the sovereign debt crisis have brought risks for the eurosystem ’ s de facto independence that it would be naive to ignore or underestimate. i will mention two of them. the first concerns financial autonomy and derives from the fact that the unconventional measures have expanded the size of the ecb ’ s balance sheet, though far less, at present, than those of the us federal reserve and the bank of japan. the quality of the securities held or accepted as collateral for bank refinancing has declined. in principle, monetary measures of macroeconomic stabilization can produce both losses and profits for the central bank adopting them. 22 but if a central bank made losses, its reputation would be endangered 23 and its ability to pursue its objectives could be put in doubt ; ultimately, there could be mounting political pressure to reduce its independence. this is especially true in the case of the eurosystem, which not only manages a currency without a state but finds itself facing a multiplicity of states which in these years of crisis have become more sensitive to what divides them rather than strengthening what unites them. the second, and far more important, risk consists precisely in the incompleteness of the european construction. some are calling for amendments to the treaty in order to expand the ecb ’ s mandate. 24 in particular, on the american example, it is urged that the objective of price stability be flanked by an explicit objective of equal status in terms of unemployment or employment levels ; and that the ecb be allowed to purchase government securities directly at issue. naturally it ’ s not up to me, a central banker, to say what objectives the political