, “ low for long ” has not been in the phraseology of central banks ). studies of the us treasury market have indicated that the federal reserve ’ s programme of quantitative easing ( qe ) caused a reduction in the liquidity premium return for holding those bonds. part of the effect of qe programmes is to improve market conditions for the targeted asset classes but also to see the trickle down to other asset classes as market conditions change more generally ( christensen et al ( 2013 ) ). to be clear however, qe asset purchase operations were not designed to tackle a liquidity problem in the financial system. rather, the impact on liquidity was one of the channels through which qe has affected the real economy and thus has had its intended effect in monetary policy terms. while estimates of the impact of qe are inherently uncertain, one of the desired outcomes of central bank asset purchases is to lower yields thus affecting longer term interest rates and creating a positive economic effect. in doing so, qe can improve the functioning of financial markets by reducing liquidity premia. the third post - crisis development is the impact of the growth of automated trading in financial markets, and the challenges this poses for maintaining continuous market and liquidity. over the last year volatility in many financial markets has picked up from a low base and we have seen some acute but short - lived incidents of extreme volatility and impaired liquidity in secondary markets. on 15 october last year there was unprecedented volatility in the us treasury market, and on 15 january this year there was substantial volatility in the swiss franc exchange rate following the unexpected decision by the swiss national bank to remove its europe / swiss franc floor. now, central banks are known for their powers of understatement, so what do i mean by words like “ unprecedented ” and “ substantial ”. on 15 october, 10 year us treasury yields moved intra - day by around 8 standard deviations of preceding daily changes. on 15 january, the swiss franc moved by more than 30 standard deviations. for rough scale, an 8 standard deviation move should happen once every three billion years or so for normally distributed data. you may at this point recall the saying popularised by mark twain, about “ lies, damned lies and statistics ”. i think i can be reasonably confident in saying that the fact of these events happening does not mean that we should expect low volatility in financial markets for at least the next three billion years

2011 onwards, however, developments in the two regions diverge. unemployment in the us continues to fall at more or less the same rate. 1 in the euro area, on the other hand, it begins a second rise that does not peak until april 2013. this divergence reflects a second, euro area - specific shock emanating from the sovereign debt crisis, which resulted in a six it is important to note, however, that the difference in euro area unemployment developments relative to the us also reflects very different developments in labour market participation. over the period 2010 – 12, the decline in the participation rate contributed significantly to the fall in the unemployment rate in the us. at the same time, the rising participation rate in the euro area explains part of the rise in the unemployment rate. assuming that, in both the us and the euro area, the labour force participation ratios had remained unchanged compared with 2007 and that the difference to the actual ratios had been fully reflected in the number of unemployed, the us unemployment rate in 2012 would have been higher than that of the euro area. for more information see box 7 in the ecb monthly bulletin, august 2013. bis central bankers ’ speeches quarter recession for the euro area economy. unlike the post - lehman shock, however, which affected all euro area economies, virtually all of the job losses observed in this second period were concentrated in countries that were adversely affected by government bond market tensions ( figure 2 ). figure 2 relationship between financial stress and unemployment the sovereign debt crisis operated through various channels, but one of its most important effects was to disable in part the tools of macroeconomic stabilisation. on the fiscal side, non - market services – including public administration, education and healthcare – had contributed positively to employment in virtually all countries during the first phase of the crisis, thus somewhat cushioning the shock. in the second phase, however, fiscal policy was constrained by concerns over debt sustainability and the lack of a common backstop, especially as discussions related to sovereign debt restructuring began. the necessary fiscal consolidation had to be frontloaded to restore investor confidence, creating a fiscal drag and a downturn in public sector employment which added to the ongoing contraction in employment in other sectors. sovereign pressures also interrupted the homogenous transmission of monetary policy across the euro area. despite very low policy rates, the cost of capital actually rose in stressed countries in this period, meaning monetary and fiscal policy effectively tightened in tandem. hence, an important focus of our monetary policy in