and bear higher risk weights – they will simply put their money elsewhere, and fund growth in other asset classes that are not being treated so strictly but where investment may not be, from a macroeconomic perspective, as desirable. there are of course other barriers to the securitisation market not addressed in my remarks, for example the somewhat - arbitrary imposition of caps on abs ratings by certain credit rating agencies, which are becoming increasing untenable, not only view of asset performance but also because of structural reforms in the euro area institutional structure, not least banking union and the single resolution mechanism. in addition, the liquidity coverage ratio also leaves out some abs types that could have been included in my view, however taking a step back it seems that an appropriate capital treatment is more important to achieve right now, because with too - high capital requirements european abss are unlikely to be created in the first place, much less traded. conclusion let me conclude. we have seen that sme abss can play a key role in bridging the gap between deleveraging banks and investors seeking to diversify their portfolio. there is growing recognition that, first, european securitisation instruments had a far better performance than their us bis central bankers ’ speeches counterparts and, second, significant policy improvements have been made which deem the regulatory calibration based on the worst performing global transactions and assets as inappropriate. yet the potential for sme abss to provide some funding relief for smes is limited in part by the current proposals to overhaul the securitisation credit risk framework, and is also limited by level playing field issues within eu regulations and proposals. it is not too late to change course : not all eu securitisations deserve the stigma attached to them for the past few years. there is a need to restore coherence across financial sectors in particular amid the unfavourable regulatory treatment of ( high quality ) securitisation instruments without violating prudential principles. by doing so we must act fast and in a manner that is sensitive to our own european reality. if the bank of england and the ecb were to put forward a joint statement on this issue at the forthcoming imf spring meetings, it would underline the european determination to decisively move forward. bis central bankers ’ speeches

in the financial data. according to estimates, the impact of the asset purchase programme has accounted for most of the fall in euro area long - term sovereign yields since august last year. the same applies for movements in other financial markets metrics, such as the fall in long - term corporate bond yields of non - financial corporations. beyond anticipation effects, the announcement of the expanded programme of asset purchases itself also led to substantial further falls in longer - term sovereign yields. for instance, from just before our announcement on 22 january to the close of business the day after, german 20 - year maturity yields fell by almost 25 basis points and italian 20 - year maturity yields fell by almost 35 basis points. we also saw a further fall in the sovereign yields of portugal and other formerly distressed countries – in spite of the renewed greek crisis. this suggests that the asset purchase programme may be shielding other euro area countries from contagion, which also helps us achieve our monetary policy goals across the euro area. the reductions in sovereign yields seem to have passed through into other fixed - income assets, as well as to equities and the exchange rate. yields on covered bonds and corporate bonds declined in tandem with longer - term sovereign yields – even though corporate bonds are not included in our purchase programme. such spillover effects are associated with portfolio rebalancing, which is one of the channels through which the asset purchase programme reaches the real economy : our purchases reduce returns on safer assets. this encourages investors to shift to riskier, higher yielding assets. pension funds, banks and other market participants that we buy securities from are likely to substitute these for other long - term assets, thereby eventually pushing up prices more broadly. we are aware that our measures may entail some financial stability risks. but currently these risks are contained. and should they emerge, macroprudential policy is best suited to address them. experience with large - scale asset purchase programmes in other jurisdictions shows that the portfolio balance channel works. for instance, model - based estimates show that as a consequence of the bank of england ’ s quantitative easing programme, insurance companies and pension funds invested less in gilts and more in corporate bonds, 1 leading to price increases of both investment grade and non - investment grade corporate bonds. drawing inferences from the experience in other jurisdictions is certainly helpful to gauge the potential impact of our own programme. much has been said about the different conditions – meaning much lower bond yields – under which we are starting our expanded asset purchase programme from