the possibility to focus our efforts on asset classes and countries that come under pressure. at a time of heightened market sensitivity, seeing the possibility of purchasing corporate bonds open up has created the impression that the ecb is less focused on purchasing sovereign bonds. this is a misperception. the asset purchase programme was relaunched by the governing council in september, when mario draghi was president, and has been expanded in recent days under the presidency of christine lagarde. it is a necessary tool to bolster the effectiveness of monetary policy when there is less room to use the traditional interest rate tool. the purchases involve both public and private sector bonds, with the aim of facilitating the achievement of the price stability objective. but, in fact, the operations primarily involve public sector bonds, which represent over 80 % of purchases carried out thus far. there is a lack of liquidity in the economy and this problem will become increasingly acute. these sales on the financial markets are aimed at selling bonds to obtain liquidity. i am obliged to be boring : we have all the necessary tools, we are using them decisively and are able to do even more. at present our monetary policy operations ensure unlimited liquidity for the banks. liquidity stress could emerge among non - bank intermediaries. if necessary for the conduct of monetary policy or to safeguard the stability of the financial system, the governing council could consider whether and how to expand the list of intermediaries that can be supplied with liquidity and the rules for participating in our refinancing operations. christine lagarde told european leaders that if no action is taken we run the risk of a shock like the one seen in 2008. is that the case? the global shock we face could be even worse than the one in 2008 if it is not managed with the necessary care. in the two weeks preceding the meeting of the ecb ’ s governing council, the markets fell faster than they did when lehman brothers collapsed. today the shock is more complex and potentially wider reaching. the risk of the rapid spread of the virus is causing us to make much greater changes to our daily lives than was the case ten years ago. just look around at the closed businesses and schools. we will have to revise our growth estimates. should we prepare for a recession? 2 / 3 bis central bankers'speeches the effect of the crisis will depend on the policies we implement and could reduce growth by a few percentage points, for italy and other european countries. it is therefore

mario draghi : the euro, monetary policy and the design of a fiscal compact speech by mr mario draghi, president of the european central bank, at the ludwig erhard lecture, berlin, 15 december 2011. * * * ladies and gentlemen, i am honoured to have received the invitation from professor hans tietmeyer to deliver this year ’ s ludwig erhard lecture. when i was working at the italian treasury in the 1990s, professor tietmeyer and i had many opportunities to work together. i vividly remember many of our exchanges over the course of the two decades since the maastricht treaty. and i am very grateful that he remains in close contact with the european central bank ( ecb ) as adviser to our audit committee. ludwig erhard ’ s legacy in shaping germany ’ s post - war recovery stretches far beyond his own country and far beyond his own times. his conception of the social market economy was visionary. and he even held cherished views about central bankers, stressing the importance of price stability : “ die soziale marktwirtschaft ist ohne eine konsequente politik der preisstabilitat nicht denkbar. ” i think we cannot formulate this idea any better today. ludwig erhard also helped to enshrine the principle of central bank independence. when in the early 1950s the independence of the german central bank system was not yet settled, he as minister of the economy argued that the government should not issue instructions to the central bank. you all know that the statutes of the ecb inherited this important principle and that central bank independence and the credible pursuit of price stability go hand in hand. current circumstances remain demanding, with economic, financial and fiscal issues deeply intertwined with challenges at the political level in many countries and in the supra - national european sphere. last week two sets of important decisions have been taken, which are going to be the focus of my remarks today. first, i will elaborate on the motivation for the monetary policy measures that the ecb announced last thursday and what we expect from them. second, i would also like to share with you some views on last week ’ s european council summit ’ s decisions, which brought some very important new elements to our economic and monetary union. monetary policy decisions for the euro area to explain our recent monetary policy measures, let me recall the particular role of banks in the euro area economy. the flow of credit to firms and households in the