for tltros, we define the price of the liquidity, but banks determine the volume. one tool can therefore act as an automatic stabiliser for the other. indeed, as wholesale funding costs for banks have risen, so has the attractiveness of the tltro. this substitution effect accounts in particular for the higher participation in the fourth operation by banks in less vulnerable countries. some observers have voiced concerns that the app could in fact negatively affect bank lending by squeezing margins and hence banks ’ profitability. i do not share this view. ecb staff estimates of the impact of the app show the overall effect on bank capital to be positive. capital gains on securities held, lower funding costs, improved credit quality and higher intermediation volumes outweigh the negative impact of the flattening of the term structure on net interest income. though structural problems certainly remain in the euro area banking sector, banks ’ weak profitability is to a large extent linked to the macroeconomic environment – something that the successful implementation of our programme will help address. in sum, the expanded app, combined with our other credit easing measures, is largely producing its desired effects. we judge that the recent volatility in financial markets has not materially affected this picture, although close monitoring and continuous assessment are warranted from a monetary policy perspective. it is nonetheless clear that the effectiveness of the app would be enhanced by complementary measures from other policymakers. in particular, the improving economic and financial environment provides the ideal conditions for governments to press ahead with structural reforms, which are in turn necessary to make bis central bankers ’ speeches the recovery lasting. raising expectations of future growth is vital to lift animal spirits and encourage a stronger rebound in investment, which is the cornerstone of a self - sustaining economic recovery. bis central bankers ’ speeches

they make to their customers. ” talking about promises, are sufficient securities available for purchase? “ the stock of available securities is vast. the universe of eligible assets which we could buy amounts to €600 billion in covered bonds, €400 billion in asset - backed securities and more than €3, 000 billion in sovereign bonds. it is true that we are not purchasing any securities on which the interest rate has dropped below – 0. 2 %. but there is still plenty of securities available for purchases. what we could do if that changes is hypothetical, and you know that policy - makers don ’ t discuss hypothetical situations. ” wouldn ’ t it have been better if the ecb had simply given a cheque to households? then not so much money would have been pumped into the financial system, but would have flowed directly into the real economy. “ first and foremost, the purchase of securities is an instrument that we can use because it is in line with our statute. there is nothing that controversial about it, but the same cannot be said for your “ helicopter money ”. moreover, with our programme we are injecting money into the economy. that money will bring about an improvement in market conditions and thereby make it easier for private parties to access financing. “ helicopter money has had different meanings in various contexts, from giving money directly to households to financing of public infrastructure. but all these options would bring us very close to pursuing fiscal policy. and that ’ s what we cannot do. ” are you concerned about greece and, if it comes to a grexit, do you fear the spread of contagion effects to other euro area countries? “ like everyone else, i am concerned. but i am also absolutely convinced that the worst - case scenario will be avoided. at the same time, everyone acknowledges that the degree of stress and vulnerability in the euro area has totally changed. there are no signs of contagion. ” but if it goes wrong and a grexit does come about, wouldn ’ t the ecb incur huge losses? “ the eurosystem ( the ecb and the national central banks, ed. ) has lent a total of some €110 billion to greek banks. but the risk on just over €70 billion of that amount has been shifted to the greek central bank. we jointly bear the risk on the rest of the amount. but bear in mind that collateral has been provided. we are talking about securities that are not linked bis central