what the central bank has to do is to ensure that the transmission of monetary policy functions properly again. the instruments we need for doing so are at our disposal. however, our hands are tied where disruptions to the socio - economic transmission mechanism are concerned. returning to more realistic views when making election promises and both explaining and implementing unpopular measures wherever necessary are the prerogative and responsibility of the – national – political domain. werner schneyder, an austrian political satirist, once said that europe consists of countries that do not want to be ruled by what they themselves have decided. that must change. only then will it be possible to sustainably resolve the crisis. bis central bankers ’ speeches

, an overly ample provision of central bank liquidity to the banking sector is not incompatible with our mandate to maintain purchasing power. we can adjust the interest rate for these operations at any time. and excessive liquidity is automatically returned : banks demand less liquidity as soon as the monetary transmission mechanism improves. this process is in full swing. the threeyear longer - term refinancing operations that i referred to before will expire at the beginning of 2015. many banks have, however, already repaid the funds they had borrowed. so the design of our non - standard measures is such that a special withdrawal strategy is not required. at the same time, we are aware of the long - term risks to stability associated with extremely low rates and excessive liquidity over too long a period. it is hence imperative that repair efforts in other areas are carried out resolutely and thoroughly. the ecb is indeed making an important contribution to crisis management but it cannot resolve the crisis by monetary means. in the end, it can only win time for other policy sectors to carry out the necessary adjustments and reforms. it is up to the governments of the member states to live up to their responsibility. they need to remedy remaining deficiencies in the european governance framework. and they must gear their economic policies to the demands of an economic and monetary union. important steps have been taken since the outset of the crisis. the member states must now single - mindedly continue on the path towards a new and more robust political economy. the first step taken was the establishment of an effective set of instruments for the management and resolution of crises in the euro area. initially, crisis - related measures by the member states and the international monetary fund ( imf ) had had to be arranged ad hoc. since october last year, the european stability mechanism ( esm ) has replaced the european financial stability facility ( efsf ) that had been designed as a temporary measure. the esm has the organisation structure of an intergovernmental body. with a view to the progressive deepening of european integration, its further development into a truly bis central bankers ’ speeches federal institution would certainly be more appropriate that any questioning of the ecb ’ s mandate. the new measures taken at the european level have proved to be effective in countering contagion in the euro area in the most serious stages of the crisis. financial markets and consumers are gaining renewed confidence in the euro area, even though the prospects for growth and employment remain weak