##tion risk ”. this risk has been compounded by interbank market fragmentation along national borders, and by the fear that, say, one euro of commercial money might not be worth the same everywhere in the euro area. responses are now in place or taking shape : the ecb ’ s outright monetary transactions will ease concerns of a euro area break - up, provided countries make the necessary adjustments ; and the single supervisory mechanism should be promptly implemented to restore the singleness of euro area banks ’ liabilities, then complemented by a unified mechanism to wind down failed banks. • trust in the euro as a means of payment rests on well - designed and resilient infrastructures, both at the wholesale and retail levels. i would like here to convey two messages. first, properly functioning large - value and retail payment systems are essential, and therefore public authorities and central banks have both an interest and an obligation to ensure their resilience. second, given the social and private costs of retail payments, authorities should not only focus on the smooth functioning of payment systems but also keep a close eye on their efficiency. an aristotle : nicomachean ethics, book v, and politics, book i. bis central bankers ’ speeches increased level of harmonisation and integration in the retail payments market could be a catalyst for greater efficiency. let me now elaborate. the importance of well - functioning large - value payment systems for economic and monetary union the development of an integrated infrastructure for large - value payments was necessary in order to create a single money market and to allow for the transmission of a common monetary policy in the euro area. this macroeconomic relevance explains why central banks are typically much more involved in large - value payment systems ( lvps ) than in retail payment systems. the prominent role of central banks gives them a strong influence in the design and smooth functioning of lvps. if central banks act as operators, they are even directly responsible. poorly designed and operated financial market infrastructures can indeed exacerbate systemic crises by passing financial shocks from one participant and / or infrastructure to another. the effects of such a disruption could extend well beyond the infrastructures and their participants, threatening the stability of the entire financial market and the broader economy. since the start of the financial crisis, financial market infrastructures in europe have worked well and have not in themselves added to financial instability. in short, throughout the crisis, the ecb has complied with its treaty mandate to “ promote the smooth operation of payment systems

bank actions on the grounds of moral hazard considerations. a. giovannini and l. spaventa ( 2007 ), “ subprime lessons : fix the information gap ”, 5 november 2007, http : / / www. voxeu. org / index. php? q = node / 690. let me distinguish briefly between four possible types of central bank measures : first, moral hazard issues have been raised in relation to the case in which the central bank lowers its key policy rate in response to financial turmoil. it has been argued that, if central banks lower interest rates at a time of market corrections and declining asset prices, economic agents may believe that the policy - makers are prepared to use monetary policy to support asset price valuations in order to prevent market downturns. if such belief becomes widespread, investors are likely to engage in excessive risk - taking behaviour, thereby sowing the seeds of future financial crises. in addition, if central banks are perceived to assign higher priority to supporting asset prices than to safeguarding price stability, inflation expectations may be adversely affected and even become disanchored. let me say clearly that i consider a situation in which the central bank would reduce its interest rate with a view to strengthening asset prices and banks ’ balance sheets as purely hypothetical and, in the case of the eurosystem, simply unthinkable. this is a situation that would obviously open up issues of moral hazard and that no central bank committed to price stability would ever contemplate. this discussion reminds me of a famous article by alan blinder, the former fed vicechairman. 4 he notes that academic economists are always concerned about the inflationary bias problem, that is the fear that central bankers may be constantly tempted to engineer inflation surprises in order to achieve sustained short - term employment gains, without realising that in the long run they would simply create higher inflation. blinder reassures these concerns by observing that “ during my brief career as a central banker, i never once witnessed nor experienced this temptation ”. let me then borrow blinder ’ s words and use them to reassure the concerns of those who believe that we might be tempted to temporarily forgo our commitment to price stability out of worries about financial market developments : this is a temptation that neither i nor my colleagues at the ecb ’ s governing council have ever experienced. at the same time, a different issue is when financial turbulences develop into a fully - fledged crisis and eventually affect growth prospects, therefore lowering the level