capture the complexity of the issue, as well as procedures by which indicators could be used in a surveillance and adjustment framework. if we can put in place effective surveillance and adjustment frameworks for both fiscal and competitiveness policies – and if we can ensure through appropriate regulation that our financial system serves the real economy and not the other way around – our european union and our economic and monetary union will exit this crisis much stronger than before and will be very well placed in the global economy. iv. conclusion honourable members, let me conclude by saying that as we steer a course through these difficult times, we must clearly all work hard, but we must also maintain our ambition. this means that decisions need to be proportional to the importance of the union. a single market of 500 million citizens and an economic and monetary union of 330 million citizens – which are among the largest and most advanced economies in the world and which are built on solid foundations in terms of human and social capital – cannot and should not be measured according to the strengths or weaknesses of their individual components alone. particularly as regards economic and monetary union, policy - makers need to internalise what it means to be part of a monetary union, in words and in deeds. i therefore very much welcome the calls by this parliament for ambitious reforms. the reaction of europe in times of crisis has always been to strengthen european cohesion. i would like to urge you, as members of the european parliament, as the representatives of europe ’ s citizens, to continue to give your support to that course of action. thank you for your attention.

was therefore a risk that the normal functioning of markets and the first link in the transmission mechanism of monetary policy between the central bank and credit institutions could become impaired. this would have meant that the ability of banks, which are the primary source of financing in the euro area, to provide credit to the real economy could have been seriously harmed. it is against this background that the ecb announced on 10 may not only the reactivation of previous non - standard measures, as well as the reactivation of the swap agreements with the federal reserve, but also its intervention in debt markets with the launch of the securities markets programme. the single reason for acting is that it is crucial for the effective conduct of monetary policy that government bond markets function as properly as possible. the government bond markets are very important for three reasons. 1. first, interest rates on government bonds usually set a floor for the interest rates that firms and banks have to pay when issuing their bonds. in circumstances of highly disrupted bond markets, the short - term interest rates of the central bank would no longer be passed on to households and firms, and thereby to prices, to the appropriate degree. this is what we call the price channel. 2. second, sharply lower bond prices implied by the much higher interest rates associated with disrupted bond markets would cause significant losses in the portfolios of financial and non - financial sectors ; for banks, this would reduce their ability to provide loans to the economy. this is what we call the balance sheet channel. 3. third, abnormally low liquidity for government bonds would reduce their role as collateral in refinancing operations, thereby also hindering banks ’ supply of loans. this is what we call the liquidity channel. the decision to start intervening in bond markets was therefore taken in order to help maintain the appropriate transmission of monetary policy to the real economy in the euro area by addressing the malfunctioning of some segments of the securities markets. as the aim of the programme is not to inject additional liquidity into the banking system, we fully neutralise the bond purchases by means of specific reabsorption operations. as a result, the prevailing level of liquidity and the money market rates are not affected by the programme. in other words, our monetary policy stance is not affected, and there are no inflationary risks related to this programme. let me emphasise that we took the decision to introduce the securities markets programme fully in line with the provisions of the treaty, only operating in the