for your attention. 1 daly, k., ( 2016 ), “ a secular increase in the equity risk premium ”, international finance 19 : 2, pp. 179 – 200. 2 caballero, r. and a. simsek, ( 2017 ), “ a risk - centric model of demand recessions and macroprudential policy ”, nber working paper no. 23614. 3 bernanke, b., ( 2005 ), “ the global savings glut and the us current account deficit ”, sandridge lecture, virginia association of economics, richmond, virginia, federal reserve board. 4 caballero, r. and e. farhi, ( 2014 ), “ the safety trap ”, nber working paper no 19927. 5 see “ macroprudential measures in countries subject to ecb banking supervision and notified to the ecb ”, ecb. 6 belgium, finland and luxembourg. 7 cyprus, estonia, finland, ireland, latvia, lithuania, the netherlands, slovenia and slovakia. 8 see “ ecb contribution to the european commission ’ s consultation on the review of the eu macroprudential policy framework ”, ecb. 9 see “ policy recommendations to address structural vulnerabilities from asset management activities ”, fsb, 12 january 2017. 10 see van der veer, k., a. levels, c. lambert, l. molestina vivar, c. weistroffer, r. chaudron and r. de sousa van stralen, ( 2017 ), “ developing macroprudential policy for alternative investment funds, towards a framework for macroprudential leverage limits in europe : an application for the netherlands ” ; ecb and dnb occasional paper, forthcoming october 2017. 11 see “ margins and haircuts as a macroprudential tool ”, remarks by vitor constancio, vice - president of the ecb, at the esrb international conference on the macroprudential use of margins and haircuts, frankfurt am main, 6 june 2016. 20 / 20 bis central bankers'speeches

euro area. the eonia is expected to go above zero only in 2019 and reach 2 % in ten years - time. on the other hand, market expectations of ten years german and spanish sovereign bonds yields five years from now are respectively 1. 5 and 3. 3 and only move to 1. 76 and 3. 9 when assessed ten years from now ( figure 5, rhs ). indeed, markets expect 10 year bond rates to remain much lower than in the past for a long period of time. 6 / 20 bis central bankers'speeches yield and spreads of euro area countries ’ sovereign debt have remained stable or even dropped with no signs of turbulence ( figure 6 ). while these developments are supported by the ecb ’ s expansionary monetary policy, they also 7 / 20 bis central bankers'speeches result from the deep adjustment undergone by the countries that were under stress during the crisis. the change in policies and the structural reforms implemented contributed to a notable reduction both in their external and fiscal imbalances. this has enhanced the overall resilience of the euro area against possible economic and financial shocks. thanks to significant fiscal consolidation efforts, fiscal deficits across euro area countries have been reduced ( figure 7 ). the european commission expects deficits below 3 % of gdp and positive primary surpluses in almost all euro area countries in 2018. the increased robustness of the euro area economy is also reflected in the gradual unwinding of the large current account deficits accumulated by several countries before the crisis. practically all those countries are now showing a surplus and the adjustment was mostly of a structural nature ( see the blue bars, figure 8, lhs ). this turnaround was achieved because the initial dramatic increases in the real exchange rates have largely been corrected ( see figure 8, rhs ). in most former programme countries relative unit labour costs are now below their respective level in 1999. all these positive adjustments have certainly contributed to underpin the evolution of sovereign bonds. 8 / 20 bis central bankers'speeches likewise, corporate bond yields have continued to decline in the euro area ( figure 9 lhs, figure 10 lhs for high yielders ). spreads for the debt of both euro area banks and non - financial firms relative to risk - free benchmarks have decreased significantly since the beginning of the year. similarly to the u. s., this has reflected exceptionally low bond term premia ( figure 9, rhs ). compressed or even negative term premia may however point to potential