liquidity and high volatility. in this context, investors ’ worries regarding a loss of market access for some member states may have become entrenched, and their expectations self - fulfilling. moreover, for some countries, government debt market liquidity has been threatened to completely dry up in some periods. overall, there has been a combination of fundamental causes and market distortions. it soon became clear that the dramatic movements in government bond yields were not merely a barometer of investors ’ valuation of liquidity and credit risk. rather, the extreme levels of bond yields themselves were exerting an adverse influence on other financial market segments, the banking sector and also the effectiveness of monetary policy. what is the relevance of sovereign debt market tensions for monetary policy? there is a strong link between the stability of sovereign debt markets and the smooth functioning of monetary policy. this becomes very clear once we consider the prominent role of government bonds in the monetary policy transmission mechanism. i would like to identify four channels through which the functioning of government bond markets can interfere with the transmission of monetary policy. let me call them the interest rate channel, the wealth channel, the collateral channel, and the bank balance sheet channel. first, government bonds play a key role in transmitting the monetary policy stance to the real economy via the so - called interest rate channel. in times when government bonds are considered as essentially risk - free and liquid instruments, a change in current and expected policy rates is a central factor in shifting the government bond yield curve. changes in longterm bond yields, in turn, translate to some extent into movements in corporate bond yields and bank lending rates – either via arbitrage relations or via pricing heuristics based on government bonds –, thus ensuring a smooth transmission of monetary policy throughout financial markets. however, since end - 2008 bond yield changes of several sovereign issuers in the euro area have become heavily dominated by high and volatile premiums, often driven by contagion and market overreaction. such effects have come to override changes in the monetary policy stance, blurring the transmission of monetary policy signals to the real economy. second, faced with threatening direct and indirect losses from strong price declines of sovereign bonds, consumers may opt for precautionary savings, which would counteract a desired stimulus to consumption from monetary policy easing. bis central bankers ’ speeches third, government debt securities have been a key source of collateral for banks to use in secured lending with other banks and the ecb.

more integrated data production processes can effectively reduce the burden on reporting agents and, at the same time, deliver more information to data users. indeed, in attempting to collect more micro data ( such as through the ongoing eurosystem project to collect securities holding statistics on a security - by - security basis ), we will face the challenge of finding ways to adapt more flexibly to new user demands without imposing additional reporting requirements on data reporting agents. these efforts should be reinforced by establishing harmonised data collection frameworks common to central banks and supervisory authorities. the trade - off between the reporting burden and the amount of information available has to be tackled at its roots, owing to the ever - growing likelihood of additional, unforeseeable requests for data on an ad hoc or regular basis. multi - purpose data collection offers a viable solution to this problem and, given the present scarcity of resources, there is virtually no alternative avenue to enable central banking statistics to successfully serve both eurosystem mandates. any belief to the contrary will, in my opinion, inevitably meet with disappointment. this type of approach should not be pursued only by statisticians. the importance of having an adequate legal framework for sharing with statisticians confidential data collected for supervisory purposes should not be underestimated. indeed, the legal framework empowering the ecb to collect data is designed to allow the exchange of confidential information within the escb in order to compile statistics. statisticians are well aware of the need to protect data confidentiality and have strict procedures in place to safeguard the confidentiality of all types of information used in their statistical compilation processes. legal obstacles, however, still remain in the case of data collected from reporting agents for other purposes, such as supervisory purposes. within the existing european supervisory architecture, confidential information is not only collected by the various competent national authorities that may share information with the european supervisory authorities but is also collected and exchanged on the basis of a wide range of legal acts, each with their own different characteristics. in practice, this framework does not facilitate the smooth exchange of confidential information. this is why i am very supportive of any change in the legislation which is aimed at facilitating such exchanges but which at the same time ensures strict protection procedures for confidential data. i cannot stress enough the importance of this. confidentiality issues are of course ever - present in these discussions and, to a certain extent, hinder progress. this could partly be attributed to a european tradition which attaches great importance to keeping