in particular senior management and equity holders, and possibly debt holders, pay a sufficient price for the rescue. this issue has been discussed at length in the literature, the bulk of which convincingly argues that moral hazard issues can be taken into account in a satisfactory way in the design of the rescue mechanism. so, to conclude on the moral hazard topic, i would say that, in order to draw meaningful conclusions, it is important to distinguish between the very different possible types of financial crisis management measures available to central banks. when assessing and choosing among these different measures, it is necessary to take into account the implications for both the central bank and for its counterparties, including the future incentives of the latter, in order to achieve, overall, the most efficient allocation of resources. separation of liquidity management and the monetary policy stance finally, a frequent focus of our communication during the turmoil has been the importance of distinguishing between interventions related to liquidity management and changes in monetary policy stance. it is very important for the public to understand that the implementation of technical measures related to liquidity management during the current turmoil has been completely separated from any considerations on the monetary policy stance. contrary to the occasional public perception, these operations have had no effect on the overall liquidity supply to the banking sector. overall, the amount of liquidity provided within the various maintenance periods since the start of the turmoil has remained unchanged. instead, the liquidity provision has been to some extent simply brought forward in time within each period, thereby simply representing a shift in the time path of liquidity supply within the reserve maintenance period. also, it is important to understand that the interest rates at which the fine - tuning operations and the supplementary longer term refinancing operations were settled contain no information on the future monetary policy stance, since the ecb acted as a rate taker in these operations. the need to understand the difference between technical liquidity provision measures and changes to the monetary policy stance is particularly important in the current environment, since the turmoil in money markets has occurred at a time of increasing concerns about rising inflationary pressures and deteriorating outlook for inflation. in this context, misunderstandings about the purpose of our liquidity interventions might adversely affect inflationary expectations. conclusion let me conclude by emphasising that the recent market developments have stressed the importance for policy - makers to have access to timely and accurate information on financial developments, and to set up mechanisms that facilitate the smooth and rapid exchange of information among market participants, central banks and other

borrowing facility, such as the discount rate or the marginal lending rate. the case there for moral hazard is not entirely obvious to me at least as long as ( 1 ) such a reduction is a measure used to steer short - term inter - bank rates close to the target level and ( 2 ) as long as the rate of the borrowing facility is in any case close to the target rate – e. g. one percentage point or less – so that a reduction has no substantial impact on the profit and loss accounts of banks. in this regard, the recent money market tensions have confirmed the importance for the effective liquidity management of banks of enjoying unimpeded access to borrowing facilities. the fourth potential moral hazard issue is a widening of the set of eligible collateral in a central bank ’ s monetary policy operations. admittedly, this type of measure could have moral hazard implications, particularly ( 1 ) if the general widening of the collateral set in fact targets a small number or, say, even a single bank under liquidity stress, which is rich in the specific type of additional collateral ; and ( 2 ) if the central bank offers facilities, for instance a standing borrowing facility, to effectively refinance such collateral. this type of action invites moral hazard as it may indeed be decisive to establish whether the single bank fails or not, while at the same time sparing to the banks ’ management and shareholders the substantial costs associated with resorting to real emergency liquidity assistance. therefore, a widening of the collateral set accepted for monetary policy purposes should probably only be considered if this measure would substantially help a significant number of banks and if the set of assets were very narrow. in this case the lack of collateral obviously seems to be more of a systemic issue, and the central bank should consider taking action. in this respect, let me underscore two features of our collateral framework that have served us well in the recent period. first, access to funding is available to a broad set of counterparties. and second, the eurosystem – whilst requiring high - quality standards – accepts a broad range of public and private fixed - income securities, as well as nonmarketable assets. hence, sufficiency of collateral has not been an issue for the eurosystem, even at the peak of the refinancing needs during the turmoil. finally, moral hazard is a potential issue in individual banks ’ emergency liquidity assistance. but here, it is up to the central banks and supervisors to ensure that