credit growth in the euro area has, for instance, been on the decline since the second half of 2012. bis central bankers ’ speeches even though more recent surveys undertaken by the eurosystem on bank lending show that credit conditions in the crisis countries have largely stabilised in the first half of this year, around 60 % of the banks report that the current terms and conditions for loans are more restrictive than those prevailing, on average, over the period since 2003. and if businesses or consumers know that they have to pay more for a loan than their credit standing would justify, they will not even ask for credit. that is exactly where the second part of our package of measures kicks in. the two targeted longer - term refinancing operations we have announced for september and december this year will allow banks to borrow, for a period of up to four years, funds in an amount of initially 7 % of their euro area non - financial private sector loans outstanding at the end of april. the focus of our endeavours in this respect is clearly on loans to businesses. that is why residential loans to households have been excluded. between march 2015 and june 2016, all eurosystem counterparties will be able to borrow additional funds. that additional liquidity will, however, be closely linked to the respective bank ’ s net lending in order to ensure that the money actually goes where it is needed. but many of you may be asking yourselves whether, given that many banks are already repaying the funds raised through the previous three - year longer - term refinancing operations early, there is really any further need for long - term liquidity. we are indeed noting that the terms and conditions under which banks can raise funds on the money and credit markets have eased considerably ( by around 100 basis points ) since july 2012, and that this has slowly reduced their dependence on central bank liquidity. the target balances relating to payment transactions between central banks have fallen by some €540 billion, i. e. have been almost halved. these are favourable signs. although financing conditions for banks in the crisis countries have improved dramatically, interest rates on loans to small and medium - sized enterprises ( smes ) in these countries are nonetheless still significantly higher than those in germany or other core countries. the high lending rates in the crisis countries are, of course, due to the higher credit risk there, as can also be seen from the high risk of default and the proportion of non - performing loans in these countries

is restricted. bis central bankers ’ speeches the more the key interest rates are lowered and the longer the low interest rate phase lasts, the bigger the risk that one of these undesired side effects materialises. how should we respond to such developments? should monetary policymakers make compromises on their objective of price stability? i don ’ t think so. and not only because i feel committed to our treaty basis. a basis that we are not authorised to change. even if, in choosing its instruments, the ecb ’ s governing council cannot ignore the side effects but must precisely analyse the costs and benefits, the monetary policy objective of preserving price stability is always at the forefront ; it is always the primary aim. but that does not mean that we should simply accept these undesired side effects. effective macro - prudential oversight, committed to preserving financial sector stability, is a central building block for a stable monetary and economic union. europe has comprehensively responded to this lesson from the financial crisis and has created the appropriate legal and institutional preconditions, which must now be made a reality by all eu member states. as our experience shows, it is not enough to gear regulation and supervision exclusively to the stability of individual financial institutions. it is rather the close interaction between macro - prudential oversight and micro - prudential supervision that is one of the essential prerequisites for consistent crisis prevention. at european and national level, there are various institutions that can counter some, though not all, of the risks of asset bubbles. one such institution in germany is the financial stability commission, which is tasked with identifying and evaluating risks and recommending mitigating measures. recommendations may be addressed primarily to banking supervisors, which have in recent years acquired a broad toolbox of instruments through the various legislative initiatives. for example, banking supervisors can now respond to a regional property bubble by subjecting banks to higher capital requirements in order to make credit more expensive. thus the ecb, too, through the establishment of the single supervisory mechanism, has macro - prudential powers. while the national authorities remain entitled to use macro - prudential instruments at the national level, they must notify the ecb of their measures in advance. the ecb has the option of tightening national measures. in a sense, this is a protection against a failure to act at national level and hence improves the outlook for a more stable financial system in the euro area. nonetheless, in particular with regard to