preserve price stability and contravened the singleness of monetary policy. the possibility that financial claims may be redeemed in a different unit of account than the one in which they were denominated at issuance – that is, the euro – was the prime source of panic that fractured transmission of monetary policy a year ago. omts priced that risk out of market values and act as a deterrent against a resurgence of fundamentally unjustified redenomination fears. but their role is cast within a robust framework in which the ecb can fulfil its primary task of ensuring stable prices in steady financial conditions. and the fiscal authorities can take care of their solvency conditions and concentrate on structural adjustment. one concern that has been raised with regard to omts is that they may discourage reform at the national level. quite the opposite is true. omts can be applied only if governments accept policy conditionality that leads to reforms. at the same time, it was the requirement of effective conditionality embedded in omts discourages governments and parliaments from requesting a programme unless strictly necessary. they can either reform without omts and retain economic sovereignty or they can reform with omts but give up some of their economic sovereignty. either way, they have to persevere in their reform efforts. so it is quite misleading to compare omts to historical episodes in which governments relied on central bank support to replace fiscal consolidation. another concern made against omt was that conditionality weakens the independence of monetary policy. the reality is that omt ’ s are not tied to political decisions since the governing council retains its full discretion, even after a country has engaged in a programme. in addition, that same conditionality ensures that the governments remain solvent, which in turn protects the freedom of action of monetary policy. a third argument made against omts suggests that they would reintroduce excessive compression of euro area bond yield spreads, as observed prior to the crisis. this too is inaccurate. bis central bankers ’ speeches omts are designed to keep government bond yields just below ‘ panic ’ levels, as previously defined, not to bring them down to levels that would somehow help government solvency. as we have seen, the mere existence of omts keeps government bond yields from rising excessively : the market expects that if yields rose too much, governments would apply for the programme and ecb purchases would bring yields back down. omts have therefore had a self - fulfilling downward effect on yields, just as

all other indicators show that our monetary policy is working : credit is improving significantly, both in the volume and cost of loans, and economic activity is recovering. not strongly enough, but it is steadily increasing. bis central bankers ’ speeches you said you are ready to act with all available instruments, if needed. should you be doing more? and which instruments, as you have ruled out helicopter money and interest rates seem near their lowest levels? let me first reiterate that helicopter money is not something we are discussing or even considering. we announced a very strong package in march and have not implemented all the measures yet. all conventional and non - conventional instruments are available, but we are not having that discussion now. you have relied on negative interest rates, which by your own admission are “ complex ” and have a long - term impact on the financial sector. they are also harshly criticised in germany … we need to look beyond banks. our action is not about supporting any particular industry. and even for banks there is evidence that the net interest margin has been rising, not falling. the effect of a low and flat yield curve is offset by expanded volumes and lower risk, which reduces loan loss provisions. this will continue with the recovery. in the long term, if interest rates continued to be this low, that would not be good news for the euro area. but that has nothing to do with monetary policy. it would mean that growth and potential growth had not picked up, which would affect the real return in the economy, the return of investment projects. we don ’ t want to be in that situation. that is why the eurozone needs to support investment as much as possible. monetary policy can only contribute to this. we have seen some public initiatives, like the juncker plan, that go in the right direction. the imf is more outspoken than the ecb in asking countries with fiscal space, i. e. germany, to invest more. we agree on that. and we have said that fiscal policy and structural reforms should support growth, to alleviate the burden on monetary policy and enhance its effectiveness. fiscal space can be used for investing in socially valuable projects or, for example, cutting taxes on labour. but we are not in the business of giving detailed advice to governments. that is the job of the european commission. on germany, we note that they are spending money to address the flow of refugees. countries that do not have fiscal space, on the other hand, should not try to