in addition, the freeze - up of the securitization markets likely contributed to banks'balance sheet growth. according to the federal reserve's senior loan officer opinion survey on bank lending practices, banks have tightened lending standards sharply over the past 18 months. the january 2009 survey found that respondents had tightened their lending policies for all major loan categories further in late 2008. respondents also indicated that demand for loans from both businesses and households continued to weaken, on balance, over the survey period. with regard to commercial loans in particular, many survey respondents pointed to a less favorable or more uncertain economic outlook as a reason for tightening their lending standards and terms over the previous three months. most respondents indicated that a worsening of industry - specific problems and their bank's reduced tolerance for risk were also important factors in their decision to tighten lending policies for commercial loans. among the few respondents that saw an increase in loan demand over the previous three months, all indicated that business borrowing had shifted to their bank from other bank or nonbank sources because the other sources had become less attractive. in addition, more than 30 percent reported that inquiries from potential business borrowers had decreased during the survey period. for commercial real estate ( cre ) lending, 80 percent of domestic banks reported that they had tightened their lending standards over the previous three months, slightly less than the roughly 85 percent that reported doing so in the october survey. of note, about 30 percent of the respondents indicated that the shutdown of the commercial mortgage backed - securities ( cmbs ) securitization market had led to an increase in cre lending at their bank over the second half of 2008, whereas about 15 percent indicated that the shutdown of the cmbs securitization market had reduced the volume of their cre lending. survey respondents also noted continued tightening for consumer products, including residential real estate lending and revolving home equity lines of credit ( helocs ). notably, only four of the nearly 80 respondents reported making subprime mortgage loans over the previous three months. stepping back, it is now clear that in recent years banking and financial markets experienced a period in which risk was generally under - priced and where credit was too freely available. the realization by many market participants that risks were larger than anticipated has contributed to the decline in prices for financial assets. as a result, some financial institutions – including some banking organizations – have experienced significant losses, leading to the need to raise additional capital or, in some cases, sell or shut

granted. sceptics doubted that it was possible to establish the euro as a stable currency and to successfully formulate a monetary policy for a currency area, so diverse in many respects. in particular, the coexistence of sovereign national fiscal policies and a supranational monetary policy was considered as a dangerous mixture. the single approach implied by the single monetary policy was criticised as a serious hindrance to further economic convergence. some sceptics even took the view that a stability - oriented monetary policy was bound to fail in such a situation. where do we stand today? the experiences over the past five and a half years make it clear that the euro has been firmly established as a stable and credible currency. the introduction of the euro both in book - entry form and in the form of banknotes and coins went extremely smoothly and was virtually free of technical problems. in january 1999 we established almost over night a unified money market which worked well from the very start. new payment systems for large - value transactions were implemented successfully. three years later the introduction of the euro notes and coins, which was a unique logistical undertaking, took place smoothly, without any major hitches. equally important, the ecb ’ s monetary policy has been successful in keeping inflation and inflation expectations under control, even in the face of exceptional uncertainty and a number of substantial, mainly upward, price shocks hitting the euro area economy. to a large extent, the ecb ’ s monetary policy has been operating in a context of exceptional economic, financial and geopolitical uncertainty, as was for instance the period following the traumatic terrorist attacks of 9 / 11 three years ago. it is my strong belief that the euro and our single monetary policy have considerably contributed to protecting our economies which otherwise could have been much more adversely affected. with a view to anchoring long term inflation expectations we kept a steady hand and never overreacted, which bears testimony to our capacity to weather difficulties. we succeeded in delivering the best yield curve available in the economies that were to form the euro area. this was in sharp contrast to the view of some observers who argued that the quality of the euro as a new currency would converge only towards a sort of arithmetic average of the legacy currencies, rather than to the benchmark set by the most credible national currencies that were merged into the euro. in fact, what happened is that the very low market interest rates that existed only in a small number of economies were immediately extended to the