like politics will impact on the fundamental outlook. that is what is happening right now with the market participants assessing the reform agenda in the us, and probably will happen when the 3 / 7 bis central bankers'speeches brexit negotiations are underway. if some tail risk scenario were to materialise, however, markets might reassess valuations a lot more forcefully, and prices of risky assets might then adjust accordingly. 3. transitory and structural changes in market liquidity ladies and gentlemen distortions in asset prices are one concern when discussing financial markets. other concerns are related to changes in the market place. today, we are facing a situation where central bank liquidity is hitting all - time highs daily while, at the same time, market liquidity appears to be fickle in a number of segments. reason enough, in my view, to shed some light on factors that influence market liquidity. 3. 1 the app and securities lending as already mentioned, the purchase programmes seem to have been successful in lowering fixed income yields and fighting potential deflation risks. nevertheless, they have been criticised strongly. not only for inducing concerns in matters of supporting further government debt and delaying structural reforms, but also because they are said to create market distortions. academic evidence on the effects of non - standard measures is helpful for determining the need for remedial measures, but unfortunately rather rare. the bundesbank and the bank for international settlements have launched a joint project which analyses the impact of purchases within the public sector purchase programme ( pspp ) on prices and liquidity of bunds in the first 18 months of the programme. the researchers provide evidence for negative side effects over the lifetime of the programme, eg decreasing bund market liquidity. based on data from the bund cash market, the authors not only show deteriorating liquidity conditions over the course of the programme, but also find evidence that the purchases have a negative effect on transaction costs and order book depth. these findings suggest that the scarcity effects of asset purchases can impact adversely on market functioning. strains in market liquidity have also become visible in the repo market. especially at quarter or year ends we have seen deeply negative repo rates. this can be attributed to a variety of reasons, but the large - scale purchases of the eurosystem may have played a role. in order to curtail tensions in repo and bond market liquidity, eurosystem central banks have made their holdings available for securities lending from the start

of the pspp. let me go a little deeper here, as securities lending is a key topic at this conference. the lending was implemented in a decentralised manner in the eurosystem. the bundesbank started by using the automated clearstream lending facilities. in september 2016 we also began to offer a bilateral repo facility. not all the features of the bilateral repo facility have been fully appreciated by market participants. we have imposed relatively strict operational and risk management parameters. this concerns specific terms such as a maximum maturity of seven days or the exclusion of automatic rollovers as well as certain collateral requirements. i would like to stress that the lending facilities for the asset purchase programmes are designed as backstop facilities. we do not want to crowd out private players ; we are just offering supplementary facilities to the repo and lending markets. against this background, we regard somewhat stricter operational parameters as justified. furthermore, as a central bank we have to 4 / 7 bis central bankers'speeches place particular emphasis on risk mitigation, and most of the lending parameters serve exactly this purpose. despite the criticism put forward by some market participants, in the meantime our repo facility appears to be being well received in the market. so, allow me to note that the conditions do not appear to be overly harsh after all. the outstanding volume has been continuously growing and most of our active trading counterparties are also using the repo facility. especially the opportunity to submit cash collateral for pspp securities lending, which was implemented in december 2016, has enhanced the popularity of the bilateral facility. the app securities lending primarily addresses the most active market participants in the respective markets or primary dealers. it is, however, open to other counterparties as well. in 2017, volatility in the repo market for german government securities has been rather moderate so far, even at the end of the first quarter. it seems that market participants have found a way to cope with the challenging environment. the eurosystem ’ s lending facilities may have contributed to this development. another area in which various commentators and academics have recently criticised the eurosystem is the collateral framework. the eurosystem conducts repo operations to provide temporary liquidity to the banking sector and takes financial assets as collateral in return. the collateral framework defines the eligible financial assets, the related pricing methodology and the respective risk - control measures. critics contend that the eurosystem is accepting collateral of insufficient quality at excessively lenient terms. this –