). in total, based on available information, eurosystem staff estimate that the gross issuance of bonds – excluding bills – by the central governments of germany, france, italy, spain and the netherlands will be well in excess of one trillion euro this year alone. these figures will likely increase further in the coming weeks and months. such significant and concentrated issuance naturally implies that investors require a higher premium for absorbing the additional duration risk on their balance sheets. this is where our purchase programmes, and the pepp in particular, kick in. by absorbing a substantial fraction of the additional duration risk on our balance sheet, our measures have an important stabilising impact on the euro area sovereign yield curve. evidence from term structure models corroborates this view ( slide 3, right chart ). in germany, for example, we had seen a sudden and sharp turnaround in term premia ( the red bars in the chart ), and hence in yields, in the run - up to the pepp announcement, reflecting expectations of a strong surge in issuance. the pepp interrupted and reversed this dynamic, thereby safeguarding the financial conditions that are consistent with our primary mandate. but because of the wide uncertainty around the ultimate economic and fiscal effects of this crisis, and the likely substantial additional issuance needed in coming years, yields have not fully reversed and remain above pre - corona levels. these effects are likely to have been aggravated by the second factor – the challenging market liquidity. although the announcement of the pepp triggered an improvement from previously impaired levels, liquidity is still far from normal. bid - ask spreads, even in deep liquid markets, such in the 3 / 6 bis central bankers'speeches german bund market, remain well above the norm ( slide 4, left chart ). eurosystem portfolio managers often report a limited amount of offers and sometimes no sufficient quotes for bonds, in particular for those issued by some smaller jurisdictions. to improve liquidity further and reduce volatility, we decided to use the full joint flexibility of our asset purchase programmes, both the app and the pepp, and increased our presence in the market by frontloading purchases measurably ( slide 4, right chart ). current weekly purchase volumes far exceed the levels we have implemented over the lifetime of the app so far, even compared to the period when purchases were running at a monthly pace of €80 billion in 2016. and the eurosystem has been using all the inbuil

debt. as a third factor, we have observed clear imbalances in global governance. still at the current juncture we must be aware of the shortcomings in the international financial architecture. here, it is not necessarily the analysis that was the problem : the rising risks in the global financial system were identified in the process of international cooperation. the imf coordinated a multilateral consultation in 2006 - 07 to address global imbalances. the g7 and the g20 regularly flagged concerns related to imbalances in their communiques. policy recommendations were developed, but not appropriately enforced during this period. also, the dangers of a sharp and abrupt correction were not generally perceived as grave and quasi - immediate. i have to say that in this respect it is in the constituency of central banks that we can find the clearest public statements on the need for the private sector to prepare for a very serious market correction. this was the sentiment of the global economy meeting of central banks governors in basel as early as 2006 and the beginning of 2007. and the bank for international settlements itself in its own research had been the most lucid of the international institutions. the course of action to be undertaken looking ahead, what actions should be undertaken to redress imbalances in the global financial system, in macroeconomic policies and in international governance? for the financial system, there is a need for more stringent regulation. such regulation needs to prevent a recurrence of the excesses witnessed in financial markets and must impose a much more stability - oriented perspective. the financial stability forum has already identified the key avenues for reform. these include three policy areas where change is particularly warranted, in my view : • first, introducing incentives and rules to prevent the financial sector from focussing excessively on short - term returns ; • second, improving transparency as regards risks to the financial system, as well as regarding institutions, instruments and markets that are currently unregulated or insufficiently regulated ; and • third, eliminating, wherever possible, the elements that amplify the tendency of the financial system to accumulate excessive risks and leverage in good times, and to shed risks hastily in bad times – i. e. dampening pro - cyclical tendencies. i have dwelled upon these three issues on other occasions. these points are also reflected in the g7 communique issued last saturday, and i will not elaborate on them further. what i would like to emphasise today is the overall setting of macro