the wide range of eligible collateral, which has made it possible for banks ( in their operations with the central bank ) to economise on those few assets, such as government bonds, that have continued to be tradable throughout the turmoil. in this respect, the framework has supported the continued functioning of capital markets in general. at the same time, the single list of collateral, which specifies unambiguously all assets that are eligible, has facilitated banks ’ liquidity management under stress. this has contributed to the continued smooth conduct of open market operations. let me make clear that those assets that have been under general scrutiny over the last few months, such as risky forms of mortgage - backed commercial paper, are not included in the eurosystem ’ s list of eligible collateral. while asset - backed securities are accepted as collateral in our operations, this applies only to the highest tranches of those securities, the credit risk of which is assessed as being very low. 4. conclusion i would like to conclude by stressing that the ecb has, with its regular set of tools, been able to stabilise short - term money market rates during the ongoing turmoil. several features of the framework have been – and continue to be – important in this regard. in normal times, the regularity and predictability of operations ( such as the conduct of weekly main refinancing operations with predictable allotment amounts ) is useful in order to stabilise money market rates. indeed, with the benefit of several years of experience, the eurosystem and its counterparties have learned to interpret and predict each other ’ s actions. this has led to stable behaviour in banks ’ participation in the ecb ’ s operations and the smooth transmission of monetary policy signals. in stressful times, some other features have proved to be very useful. the flexibility of the framework is one such feature ( for instance, the ability to conduct special fine - tuning operations or to adjust the amount of liquidity provided in main refinancing operations ) ; another is the broad access to operations, in terms of both eligible collateral and the number of counterparties. the functioning of capital markets has supported the success of these operations. however, the continued low marketability of many assets limits the use of such assets as collateral in market transactions, and this has had implications for the markets ’ willingness to lend and borrow on the money markets. i would hope that capital markets will continue to develop further in this respect so that

government - supported institutions brought with them, we should be confident that they should not be allowed to operate in the future as they have in the past. we cannot afford to ignore that through their use of implicit government funding guarantees, they held a significant competitive advantage in the marketplace, and that this in turn encouraged excessive risk on their balance sheets, with tragic outcomes. given past errors, how might we approach the need for some modest support for future financing within the housing industry? i see two basic options. first, if we judge that some public support is needed, we could establish public entities that focus solely on the securitization of conventional, conforming mortgages with strong underwriting standards, tight public oversight and balance sheets limited to holding amounts necessary for warehousing loans to be securitized. this makes the government a conduit only, facilitating the flow of capital but not providing the implicit guarantees on funding and assets held that contributed to this crisis. the market remains the final arbiter of standards and funding. a second option would be to give private entities sole authority to securitize pools of conforming mortgages – similar to what is now done with jumbo mortgages. if the congress was disposed to provide some favor to housing, a federal guarantee could be given to certain securities backed by mortgages meeting strict conforming loan standards. however, such favored status should be based on some limiting factor, such as need or special purpose. either of these two options would address many of the problems associated with fannie and freddie in this crisis and would create a more transparent and competitive marketplace. the latter option involving privately owned entities would offer the additional benefits of greater market discipline and insulation from political influence and control. enforce sound lending standards regardless of these actions, we must as a nation insist on the return to sound real estate lending standards. we know today that countries that avoided the worst of this most recent real estate meltdown did a better and more consistent job in maintaining an effective and consistent set of standards for loan - to - value and debt - to - income ratios. some countries, such as canada, even tightened mortgage lending requirements when real estate markets heated up. in the united states, the opposite occurred. while sound credit standards are a key responsibility of individual lenders, public policy also played an important role in the deterioration of loan quality in the united states. this occurred largely through public efforts to promote and subsidize homeownership and increase access to housing