the greek pspp, the eurosystem could purchase approximately €3. 5 billion before running into the 33 % issuer limit. furthermore, some additional funding could also be raised if greek public sector non - financial institution bond issues were to be considered as eligible marketable debt instruments. some could argue that the above amount is a mere pittance compared with the total eurosystem ’ s purchased amount of €464 billion under the app programme, with greece ’ s participation being around €12 billion ( pspp = €9 billion, cbpp3 = €3 billion ). even in this respect, the signalling effect of greece ’ s inclusion in the app will be strong enough for ggb prices to recover accompanied by a significant fall in volatility, as the overall financial environment is normalised and greece ceases to be the outlier in the euro area. it is worth simply reminding the sharp fall in the government bond spreads of peripheral euro area countries ( italy, spain ) vis - a - vis the yields of core euro area country bonds, when the ecb announced the omt programme and their convergence after the omt final approval from the european court of justice. 3. last but not least, for a successful third and final mou, namely one that will stabilise expectations and facilitate a sooner - than - later return to international capital markets, there is something that was missing from the first two mous and hopefully will be achieved this time around. as you know, there is a cumulative loss of 25 % of greece ’ s gdp as a result of the consolidation programmes and internal devaluation during the last five years. capital formation has dropped by more than 60 % in the last 7 years : from €20 billion in net investment in 2008 to – 13 billion today ( 2008 : €53 billion gross investment, depreciation €33 billion. 2015 : €19 billion gross investment, depreciation €32 billion ). so very few would disagree that the country now needs an investment shock. the question of course is where such a shock might come from, given that an adjustment programme is in place. before going into more detail on this, let me say that there are technical ways to incorporate this investment dimension in an adjustment programme ( see my article in the wall street journal ( 2012 ), adding a new dimension to the two standard concepts of conditionality, namely fiscal and structural conditionality, that of investment conditionality ). i will indicatively give you one

lending to the economy even if truly adverse scenarios materialise, as shown by the ecb ’ s vulnerability analysis published in july 2020. this shows that in the field of banking regulation, we did not waste the previous crisis and learnt our lessons well. my second point relates to regulatory response. the relief package that the ecb banking supervision announced in march was designed to ensure that banks can keep lending to the contracting economy. for instance, banks were allowed to temporarily operate below the level of capital defined by the bank - specific pillar 2 capital requirements, namely pillar ii guidance. 1 / 2 bis central bankers'speeches in lithuania, macroprudential policy was a key domain of the regulatory response package. prior to 2020, critics would say that our macroprudential set - up was perhaps too wide - ranging. but this crisis showed, i believe, that our policy stance was the right one. first, it helped prevent a deterioration in lending standards and a build - up of systemic risk in the run up to the covid - 19 shock. and second, when the time came, we implemented countercyclical policy decisions in line with the intended functioning of the framework. for instance, in mid - march, the bank of lithuania fully released the counter - cyclical capital buffer from 1 % to 0 %. overall, the relaxation of various requirements has increased the lending potential of banks in lithuania by €2 billion, or by a third, compared to 2019. of course, we are talking about potential here, not the real world. but the real - world data has been encouraging, at least in terms of lending to households, which has broadly returned to the pre - pandemic levels. going forward, policymakers should not “ waste a good crisis ” this time as well, and take a fresh look at the existing macroprudential framework. we could even consider novel ways of applying macroprudential tools – such as the application of borrower - based measures during the cycle, e. g. relaxing the loan - to - value or debt - service - to - income requirements in times of crisis. finally, i would like to make a point on the long - term issues of the european banking sector. the first issue here is inadequate bank profitability. in this regard, there is a need for consolidation via mergers and acquisitions to make the european banking sector leaner. completing the banking union by creating a european deposit insurance scheme ( edis ) would open doors for true