during which this correlation has been weak or even negative. last year, for example, after the announcement of the transmission protection instrument ( tpi ), expectations for the future policy rate increased sharply from around 1 % to 3 %. risk premia in sovereign bond markets, however, remained broadly unchanged ( slide 14, right - hand side ). these developments suggest that other factors were also at play. one of these factors is financial market participants ’ attitude towards risk, over and beyond changes in expected default losses. there is a growing literature suggesting that risk tolerance by global investors can explain a substantial portion of movements in asset prices. [ 26 ] monetary policy, in turn, is often an important driver of risk tolerance. this can be seen in corporate bond markets, where credit spreads can be decomposed into a component measuring firms ’ expected probability of default and an “ excess ” bond premium. the latter has been shown to be a powerful proxy of the risk - bearing capacity of leveraged financial intermediaries. [ 27 ] the evidence shows that changes in the excess bond premium can explain virtually all of the conditional response of credit spreads to a change in monetary policy. the reason is that monetary policy tightening typically reduces intermediaries ’ risk - bearing capacity, thereby raising the compensation they require for warehousing risk, over and beyond changes in the quality of borrowers ’ balance sheet. this is precisely what we have seen in the euro area. in the first half of 2022, the increase in the excess bond premium accounted for 80 % of the total increase in corporate bond spreads ( slide 15 ). by october, it still accounted for around two - thirds of the rise in credit spreads. portfolio rebalancing channel in reverse the partial reversal of the portfolio rebalancing channel of asset purchases is likely to have amplified this transmission mechanism compared to previous tightening cycles. indeed, over the course of last year we observed significant portfolio shifts, resulting in large volumes of securities being sold in the secondary market in a short period of time. non - bank financial institutions, for example, have offloaded a notable part of their holdings of lower - rated corporate and sovereign bonds that they had acquired during the period of asset purchases ( slide 16, lefthand side ). regulatory constraints and internal value - at - risk measures implied that leverage - constrained intermediaries which usually absorb these sell orders were facing higher costs for holding more inventory. as a result, intermediaries demanded higher compensation for bearing exposure to

negative territory in the course of 2008, the annual growth in the draw - downs of credit lines has been increasing up to the third quarter of 2008. this is based on information derived from the eurosystem ’ s bank lending survey. favour remuneration on equity and human capital, rather than long - term investment. this is not in line with the macroeconomic objectives. this is why we insist that the profits made in these months by the banking sector – which were obtained thanks to the interventions by the policy authorities to keep the system going, and thus ultimately by the taxpayers – should be used to increase the capital rather than to reward the banks ’ managers and shareholders. this applies not only to banks that have received direct assistance through guarantees and public capital injections, but also to the indirect benefits obtained as a result of low interest rates. 5. conclusion the pre - crisis period was marked by unsustainable credit policies by the banks and, more generally, by the financial system. these policies were encouraged by inadequate supervision and slack prudential regulation, and also by the excessive influence the financial system had on regulatory mechanisms. this caused the biggest crisis of the post - war period. we must find a new equilibrium in which the financial system truly supports the real economy, encouraging a flow of balanced credit. the adjustment may not be immediate and it needs to follow a gradual path in order to arrive, in due course, at a new point of balance that allows a restoration of confidence not only among investors but also taxpayers. everyone must play his or her part. the regulatory authorities have to agree quickly on the new system parameters, in consultation with the private sector. macroeconomic policy must promote conditions for a gradual adjustment, in line with the objective of sustaining economic growth and the restoration of a financial market that efficiently performs its primary role as an intermediary. market players must understand that the future cannot be a simple return to the past, to the pre - crisis situation. if we fail to reach the new equilibrium in due course we will have wasted not only the crisis but also the resources of taxpayers that have been used to save the system. this can only backfire on the system. figure 1 changes in credit standards applied to the approval of loans or credit lines to enterprises ( net percentages of banks contributing to tightening standards ) notes : the net percentage refers to the difference between the sum of the percentages for “ tightened considerably ” and “ tightened somewhat ” and the sum of the percentages for