. that path entails obvious contradictions ; for this reason, the deutsche bundesbank recommends we shun such an approach. conclusion ladies and gentlemen, we find ourselves in a situation in which difficult and, perhaps, uncomfortable decisions are unavoidable. this situation is aggravated by uncertainty in the markets and among the general public. this uncertainty has to be eliminated if we want to break free of the present crisis. yet this uncertainty cannot be eliminated by repeatedly topping up the rescue fund. instead, what we need are decisions which address the root causes of the crisis. besides a swift and ambitious fiscal consolidation, i would highlight three main points. we need clarity regarding greece ’ s future. greece must fulfil the conditions of the aid programme ; if it does not, there is no basis for granting further support. a greek default – which most certainly no - one wishes to see – cannot therefore be categorically ruled out. we need clarity regarding the banking sector ’ s resilience. it has to be strengthened where it is too low in order to prevent contagion effects. this explicitly includes recapitalisations. this is justified even though the banks are not to blame for the high level of sovereign debt in several european peripheral countries. and we need clarity regarding the future of the monetary union. i have outlined two different paths in my address. which of the two paths is chosen is in the hands of our politicians. it is now up to them to decide quickly. we therefore expect clear and landmark decisions by the european council this coming sunday. bis central bankers ’ speeches

understand is the drivers that have led to the development of two new zealand dollar debt markets : one with resident issuers and one with non - resident issuers ( e. g. eurokiwis and uridashi ). attracting domestic and offshore issuers and investors into new zealand ’ s capital market would promote financial efficiency, allow larger domestic borrowers to reduce their reliance on the banking system, and continue new zealand ’ s integration into the global economy. evidence internationally and theoretically suggests one important component of a robust capital market is the existence of a reliable and liquid government bond benchmark yield curve. a challenge for new zealand is to consider the overall net benefit of the government continuing to borrow ( i. e., issue debt ) even as it is starting to build a significant net asset position. this challenge is increasing as the new zealand government debt market becomes increasingly illiquid. the government is undertaking a review of financial products and providers. the key objective for the review is to develop an effective and consistent framework for the regulation of non - bank financial institutions, intermediaries and products. the australian government recently decided to continue issuing debt despite its persistent financial surpluses due to the perceived welfare enhancing features of a liquid government benchmark yield curve. the australian experience also suggests that once broad based credit markets develop around the risk - free government yield curve, it is possible to scale back the government debt on offer. the new zealand treasury does not undertake its government bond funding with the primary objective of maintaining a benchmark yield curve. more recently, however, the debt management office have shown a willingness to re - issue bonds that the market has expressed demand for and is working towards offering facilities that will help ensure that debt market participants can borrow parcels of government securities when they are unavailable on the open market. in addition, the reserve bank recently reduced the need for banks to hold government bonds as collateral in the interbank payment system, freeing up the supply of government bonds in the secondary market. we also introduced a ‘ bond lending facility ’ that improves the liquidity in the government bond market. market participants have indicated a preference to see fewer but larger tranches of government bonds offered by the treasury to consolidate liquidity in a few key sectors of the yield curve. moreover, unlike australia, where the supply of commonwealth government bonds is similarly tight, new zealand has not developed a liquid government bond futures market to provide a substitute. bond futures ( as opposed to physical government bonds themselves ) are the most actively traded instruments