operating costs and to better coordinate the prices of the different integrated services ( e. g. trading, clearing and settlement ), they may reduce competition when they are misused, for example, to favour a central counterparty in the silo over its competitors outside of the silo. as the eurosystem explained in its policy statement of september 2001, the disadvantages of vertical silos “ can be overcome provided that customers can choose between systems along the value chain [ … ]. it is therefore crucial that access to essential facilities, whether vertically integrated or not, should not be unfairly impeded. ” d ) growing need for adequate infrastructure in the field of credit derivatives volume growth in derivatives – especially otc derivatives – outpaces the cash markets, spurred on by increased interest in hedge funds and the ongoing innovation in the types of contract offered. while interest rates contracts remain the key hedge instrument ( 187 tri usd outstanding ), credit default contracts ( 6. 3 tri usd outstanding ) are growing at approximately 90 % per year, now reaching 10, 000 trades per day. volume growth is expected to continue over the coming years, causing some concern among operations managers on the otc market, given the lack of straight - through - processing and hence capacity to manage the volumes. this rapid multidimensional growth ( i. e. in terms of products, volumes, market participants and secondary markets ) calls for an enhancement of the post - trading infrastructure that may support more careful risk control by the various participants. as mentioned by governor kroszner, enhancing the post - trading infrastructure does not automatically mean to introduce telles quelles the same techniques that ccps use in exchanged - traded derivatives but rather to identify the solutions which are equally effective and take into account the different features of otc markets. all these developments refer to the market structure that surrounds central counterparties and are highly relevant for the interests of central banks in the fields of financial stability and financial integration. as central banks, we believe that the market structure should be market driven as long as market failures are not observed. significant market failures however must be identified and in many cases require appropriate public intervention. this brings me to my last point. what is the role of public authorities and, in particular, central banks? market forces need a sound legal, regulatory and oversight basis to work efficiently. in the euro area with its 12 countries, and in the european union with its 25 countries, the creation of such a sound basis requires first

of the monetary policy transmission mechanism. the monetary impulse that the ecb had swiftly introduced in response to the rising risks to price stability was no longer transmitted uniformly throughout the entire euro area. while the ecb had brought its official policy interest rates to historical lows, a number of countries were not in a position to take advantage of monetary accommodation. banks in those countries were tightening credit conditions, running against the monetary policy intentions of the central bank, with negative repercussions on access to finance, in particular for small and mediumsized enterprises. this translated into a drag on the economic recovery. as a result, the singleness of monetary policy was no longer ensured, posing significant challenges to the ecb ’ s policy conduct. fixing the monetary transmission mechanism and the elimination of tail risks the ecb responded forcefully to these challenges with a number of standard and nonstandard monetary policy measures. the main purpose of the non - standard measures was to reduce financial fragmentation and restore an appropriate functioning of its monetary policy across the euro area. in particular, the measures were geared towards removing two sources of risk premia : bank funding risks and redenomination fears. higher funding risks for banks had been a symptom of the crisis ever since liquidity strains had first emerged, almost overnight, in the summer of 2007. they had escalated to systemic proportions after the lehman demise. since the onset of the crisis, the ecb ’ s mainstay response to this problem has been twofold : a policy of unlimited provision of liquidity at fixed interest rates against eligible collateral in the weekly main refinancing and longer - term operations, and an extension of maturity of the liquidity operations from 3 months to up to 3 years. this dual approach to crisis management has been reinforced by two further initiatives. first, collateral rules have been adapted in various stages with a view to broadening the pool of assets that banks could mobilise for eurosystem liquidity provision. this process – which has complemented the fixed - rate - full - allotment decision – has always balanced the need to be supportive to our counterparties with the goal of exercising an appropriate degree of risk control, and to protect our balance sheet. incidentally, portuguese banks have greatly benefited from these measures. for instance, they were able to strengthen collateral buffers by mobilising additional credit claims for the purpose of obtaining eurosystem liquidity – and more effectively than other banking systems in the euro area. bis