point – or around $ 70 billion given the scale of us life insurers ’ balance sheets. 6 if done quickly, this could be a potent procyclical amplifier. similar patterns are evident among life insurers in other countries. a second piece of indirect evidence comes from the behaviour of regulators. there have been several incidences over recent years of regulators loosening regulatory constraints to forestall concerns about pro - cyclical behaviour in a downswing. for example, uk regulators loosened regulatory constraints on insurance companies in the early 2000s following the bursting of the dotcom bubble. this was due to fears of selling pressure on equities being amplified as insurance companies de - risked their portfolios as they neared regulatory constraints. pension fund regulators have taken similarly - motivated actions recently due to depressed real yields boosting the market value of liabilities. a third piece of evidence comes from analysing the impact of icpf asset allocation decisions on asset prices. in particular, at the bank we have analysed the impact of purchases of longterm uk indexed - linked debt by uk icpfs since the early 1990s ( zinna ( 2014 ) ). over this period, the combination of accounting and regulatory rules led to large cumulative purchases of long - term government debt by icpfs. at the same time, long - term real yields fell from around 4 % to around – 1 %. controlling for other factors, such as the supply of government debt, research at the bank has sought to identify the impact of icpf purchases on the yield curve. it finds the impact to be material, especially at the longer end of the yield curve. over the period 1990 to 2010, it finds that pension funds purchases lowered the two - year real yield by around 70 basis points data are adjusted to remove impact from re - valuation effects. bis central bankers ’ speeches and 20 - year real yields by around 165 basis points, with the price pressures most acute during the period 1996 to 2004. for insurance companies, the bulk of the buying pressure comes somewhat later ( 2006 to 2010 ) and the impact is somewhat smaller ( 30 basis points and 75 basis points respectively ). nonetheless, if these ready - reckoners are even roughly right, they suggest a very significant impact of icpf portfolio allocation on yields, and hence on incentives to hedge further, in a pro - cyclical spiral. this evidence, while far from conclusive, provides some important clues. there are indications of correlated, pro - cyclical

recapitalized and restructured. about a year ago, the banking system was comprised of 17 banks. within the next few months, there will only be three large banks and a few small ones. what had been a credit crunch, as banks deleveraged, is being reversed. now confidence is returning. how do you know that? i ’ m proud that the bank of greece protected financial stability in difficult – even dramatic – times. no greek has lost a single euro in his bank account. and now deposits are even coming back! depositors emptied 87 billion euros from their accounts during the crisis, more than one third of the deposit base. they sent the funds abroad or hid them under their mattresses. since june the funds are returning to the banking system. so far around 15 billion euros have returned. in december alone 6 billion euros returned in deposits. why did greece ’ s fiscal position became so difficult despite the programme? the main reason for the deterioration of the debt dynamics was that we lost 20 percent of gdp since 2009. so if we are able to change the mood and boost confidence and growth, the debt dynamics will improve fast. in 2010 you were also optimistic that, under the may 2010 adjustment program, greece will get out of the crisis without help from outside. after greece started implementing the program in may of 2010, bond spreads halved the following months. that is why i was optimistic greece would continue with the progress. but after the fall of 2010 a kind of reform fatigue set in. and then there was the talk about private sector involvement that eroded investors ’ confidence. was the debt restructuring a mistake? what is a mistake in this situation? if investors fear to lose their money, confidence is lost. had greece followed through with reforms, fully implementing its program, and in the absence of talk about the restructuring of private sector debt, the debt restructuring for the private sector could have been avoided. there was a criticism of you because you received a large severance payment after leaving your post in the bank piraeus after only two years. bis central bankers ’ speeches in early 2008 when i left that bank for the central bank, the situation in the banking sector was very different from the present situation. at that time, there was still extreme optimism. my payment was made in such a situation and was also stipulated under my contract. it was approved by all the relevant bodies, including the shareholders of my previous bank at their general assembly. let me also point out that the