yields, the stronger the impact of government bond purchases. what effect do you expect in the case of the ecb? given the low interest rates in the euro area, i have my doubts as to whether the economic effects of the purchase programme will be able to reach the desired order of magnitude …... and finance ministers are pleased that they can cheaply run into debt. that is a crucial disadvantage of the purchase programme. i am absolutely aware of the danger that the low costs of financing alleviate the pressure on governments to consolidate their public budgets and tackle the necessary structural reforms. expansive monetary policy can only provide an impetus for more growth. the decisive impulses must come from economic policies. are zero per cent yields on german government bonds justified too? depending on the class of securities, we are in negative territory in some cases. to the extent that the decline in yields on german government bonds can be traced back to the purchases by the ecb, i take a critical view. in germany the low interest rates are threatening to overheat the economy. i would not speak of an overheating of the economy, of an excess of economic growth in germany. the german economy may be able to absorb a higher key rate of interest but the same cannot necessarily be said for the euro area as a whole. a crucial point is that the ecb has to pursue monetary policy for the whole euro area, not just for one country. and it ’ s also essential that we look at price stability in the medium term and at medium - term inflation expectations. however, medium to long - term inflation expectations have clearly fallen ; that is why the current low key interest rates are definitely justified. but we should not forget that we cannot have a low key interest rate without undesirable side - effects. we must bring interest rate levels back to normal as soon as possible. do you understand why savers, banks and insurance firms become critical when they suffer from extremely low interest rates? i can well understand those concerns. a prolonged low inflation rate environment carries risks for banks and insurance firms. low interest rates increase the danger of riskier investment behaviour ; overheating or price bubbles in other asset classes can easily arise.... especially, when an economic region as heterogeneous as the euro area is governed by a single interest rate. the more heterogeneous an economic area, the harder it is to govern with a single interest rate. that is of course felt especially painfully when economic

conditions are tough. we therefore need the euro area member states to pursue economic policies that will ensure sustainable economic growth for all. the competitiveness of each individual member state must be strengthened through sound fiscal policy and structural reforms. and in places where we see overheating occurring, we must use targeted macro - prudential supervisory tools ….... that is supervision of the whole financial system with targeted regulation. such oversight enables us to identify the systemic risks and outliers in individual countries and individual markets and to counter them in some sections. given such complex tasks in different countries, are we asking too much of the ecb? no, the ecb is not on the frontline in macro - prudential oversight ; in europe this involves many institutions in all member states, which have a vast amount of information and considerable analytical capacity. in germany these are the bundesbank, the federal bis central bankers ’ speeches financial supervisory authority and the federal ministry of finance, which all work together in the financial stability committee. do we already have a housing bubble in germany? up to now, the rise in property prices has been concentrated in the larger cities. in some of these there are definitely overvaluations. but have we seen excessive growth in lending too? broadly speaking, that does not seem to me to be the case. the bundesbank, and we ourselves, will certainly continue to monitor the situation closely. bis central bankers ’ speeches