that the effects of the financial crisis on banks ’ profitability and capital position have been sizeable. banks ’ efforts to deleverage their balance sheets and build capital and liquidity buffers are constraining, other things being equal, their lending to the private sector. so far, by early may 2009, write - downs on the securities and loans of large euro area banks amounted to usd 179 billion, which corresponds to just over 18 % of the total write - downs of major banks globally ( usd 986 billion ). 9 euro area banks have successfully raised capital from both private and public sources, amounting to usd 192 billion, which exceeds the recorded write - downs. 10 of course, a key issue is the amount of potential further write - downs that could be faced by global and euro area financial institutions and the additional capital that should be raised by them to safeguard their solvency. recently the imf has estimated that the total amount of potential future write - downs of euro area banks could be around usd 750 billion, largely on their loan exposures. 11 this estimate, however, is based on assumptions and methodology that can be challenged and it is subject to a high margin of error. estimates based on alternative methodologies and assumptions yield a much lower, yet sizeable, figure. the 3 - month euribor rate is very close to the 3 - month gbp libor rate ( 1. 28 % ) but considerably higher than the 3 - month usd libor rate ( 0. 66 % ) while the 6 - month euribor rate virtually the same with the six - month gbp libor rate ( 1. 49 % ). for example, the short - term ( i. e. below one year ) bank lending rate was 3. 52 % in march 2009, some 2. 5 percentage points below its peak value ( 6. 03 % ) reached last october. this is still somewhat higher than the corresponding us bank lending rate at 2. 04 % in march 2009. of this overall figure of eur 790 billion, usd 130 billion refer to the writedowns of euro area large and complex banking groups ( lcgbs ) ; while usd 49 billion relate to other euro area banks. of this total amount of usd 192 billion in capital raised, almost usd 155 billion refer to euro area lcbgs while over usd 37 billion have been raised by other euro area banks. see international monetary fund ( 2009 ). independently of the total potential impact of the

standard measures, it will be essential to strike a balance between, on the one hand, responding in a timely and effective manner to incipient risks to price stability as the economy recovers and market conditions normalise, and, on the other hand, winding down in a proportionate manner the support schemes and non - standard measures that have been implemented to mitigate the adverse effects of the crisis on the banking system and certain financial market segments. with regard to the latter, gradualism and clear communication by the central bank of any changes to the operational framework with sufficient lead time to allow market participants to prepare and adjust their liquidity management will be essential. the ecb and the eurosystem are committed to pursuing such a gradualist approach as well as a timely and transparent communication policy. vi. conclusion i started my remarks by pointing to the relevance of heraclitus ’ insight for the last two years, namely that “ all is in flux ”. he developed further his theory of continuous change and reasoned that all that exists, in fact, “ simultaneously forms and dissolves ”. this line of philosphical reasoning led him to argue that “ the way up and the way down are one and the same ”. 14 i doubt, however, that bankers and investors would share this particular view of the philosopher, especially in the light of developments over the past few years. let me conclude, however, on a reassuring note and a wish concerning the exit from the current crisis on the basis of the logic of heraclitus that led him to the conclusion that “ out of discord comes the fairest harmony ” ( εκ των διαφεροντων καλλιστην αρμονιαν ) – which, in the context of the discussions in this conference and in relation to our policy aims, would be translated into achieving sustainable growth in an environment of price stability and financial stability. thank you very much for your attention. see kahn ( 1979 ). references european commission ( 2009 ), spring economic forecast, may. heider, f., m. hoerova and c. holthausen ( 2008 ), “ liquidity hoarding and interbank market spreads : the role of counterparty risk, ” available at http : / / ssrn. com / abstract = 1362113. international monetary fund ( 2009 ) “ global financial stability report ”, april. kahn, c. ( 1979