in times of crisis it may happen that the traditional instruments of monetary policy don ’ t suffice, or that they become blunt. this is particularly true of the key interest rate, which may eventually approach the lower boundary of zero. yet, in such a situation, there are still other measures to which central banks may turn. one possibility would be to widen money supply and to use the additional funds to purchase assets such as government bonds, but also commercial bonds, instruments issued by other banks or other financial assets. the governing council of the ecb, for instance, most recently – in its meeting on may 7, 2009 – created the possibility for the eurosystem to buy euro - denominated covered bonds issued in the euro area, and made the eib an eligible counterparty to the eurosystem ’ s monetary policy operations. yet, while central banks play a key role in providing economic policy responses to the current financial crisis, it takes a wider strategic framework to stage an effective overall response – it also takes expansionary fiscal policies to fight the crisis effectively. it is important for the public sector to counteract developments rather than exacerbate conditions through restrictive fiscal policies in a situation in which all components of aggregate demand – consumption, investment and exports – are contracting. at the same time, it is important to agree in advance on an exit strategy from expansionary fiscal policies, to readjust those policies and redirect them toward a clearly defined fiscal consolidation path as soon as the economy starts to recover on a sustainable basis. there is broad consensus among economists on the need to adopt an exit strategy – also among policymakers in austria, i presume. ladies and gentlemen, up to now, i have outlined why central banks play a key role in economic policymaking during the current crisis. to do their job, they may use a range of instruments, provided the outcome is compatible with the price stability goal. so far i have focused on central bank policy in general, and on the policy of the ecb and the eurosystem in particular. i would now like to focus even more specifically on the oenb, which – being a eurosystem central bank – naturally plays a special role in this context. after all, it fulfills a broad range of tasks that are crucial both in implementing the eurosystem ’ s monetary policy and in managing the crisis at the national level. all departments of the oenb play a role in combating the crisis, either

stance so the challenge we face is how to deliver the necessary policy stance. since the start of the pandemic, monetary policy in the euro area has gone through three phases. in the first phase – the phase of fragmentation – the flexibility of our pandemic emergency purchase programme ( pepp ) [ 10 ] averted an unjustified widening of spreads which would have disrupted monetary policy transmission. as a result, speculators stopped using short positions on particular euro area sovereigns as a way of expressing their negative views on the global economy. in the second phase, the pepp increasingly became a tool for steering the overall monetary policy stance. its size and duration became the key parameters for loosening financing conditions and pushing down the euro area yield curve to the low levels observed last december. in parallel, our targeted longer - term refinancing operations ( tltros ) successfully pinned down bank lending rates to some of the lowest levels on record. we have now entered a third phase, in which we need to preserve accommodative financing conditions to support the recovery and the convergence of inflation to our aim. this essentially means more focus on 10 / 19 anchoring key financial variables – above all, lending rates and the yield curve – as key indicators of the monetary policy stance. this approach should progressively add accommodation because, as actual and expected inflation pick up, anchoring nominal yields allows real yields to fall. and there should be no doubt that lower real yields would provide welcome additional stimulus, given how far we are from full capacity and the subdued level of current and expected inflation. implementing such a policy requires the central bank to broadly identify what level of nominal yields it is aiming to achieve ; to tailor its purchases to achieve that level ; and to be ready to intervene to the extent necessary. in december, when we recalibrated the pepp, the governing council determined that the financing conditions prevailing at that time were favourable. so, that constellation of financing conditions should be seen as the reference point for our policy moving forward. by that metric, the steepening in the nominal gdp - weighted yield curve we have been seeing is unwelcome and must be resisted. amid the increase in market yields ( chart 5 ) [ 12 ], president lagarde recently stated that “ the ecb is closely monitoring the evolution of longer - term nominal bond yields. ” [ 13 ] in the past week, euro area yields across the maturity spectrum, including risk - free rates,