indebted governments. in addition to that, purchases are restricted to a maximum of 33 % per country and bond series. this limit was set so that the eurosystem does not have to get into the awkward situation of having to prevent any restructuring of sovereign debt that may be deemed necessary. if the eurosystem were to acquire too many bonds, it would have a blocking minority in any vote on a haircut. and it would have to make use of its blocking minority in order not to violate the prohibition of monetary financing. but even below that threshold, the purchases have made the eurosystem the member states ’ largest creditor. what is more, in the context of asset purchases, changes in monetary policy impact much more directly on governments ’ funding costs than interest rate moves do. this has additionally blurred the line between monetary policy and fiscal policy. ultimately, if a return to monetary policy normality were called for, this could lead to the central bank coming under greater political pressure to keep funding costs at a low level – even if this were to the detriment of the objective of price stability. since, moreover, governments pay largely the same rate of interest on that part of their debt held by the central banks, for that part the disciplining effect of the capital markets is undermined, too. given the large number of problems, i regard government bond purchases purely as an instrument of last resort, say, when it comes to staving off a dangerous deflationary downward spiral of declining prices and wages. but i ’ ve said in the past that the fears of deflation are exaggerated. now they have very largely disappeared. indeed, the economic recovery in the euro area is gaining further momentum and is broadly based. that is also evidenced by the upward revision of the ecb staff ’ s growth projection. the projection has also shown, however, that inflationary pressure remains rather subdued. the domestic price pressures identified in the projection are, however, quite consistent with a path towards our definition of price stability. that fact that it ’ s taking a little longer to achieve our monetary policy objectives also has to do with enterprises and households in many euro - area countries still being occupied with reducing their high levels of debt in some cases. and a number of crisis - affected countries have succeeded in strengthening their competitiveness and transforming current account deficits into surpluses. but improving price competitiveness through wage moderation is, naturally enough, also dampening domestic price pressures. given subdued

. small and medium - sized institutions prove largely resilient to a simultaneous rise in the three types of risk. 2 / 4 bis central bankers'speeches thus the stress test scenario presents a mixed picture overall. on the whole, german banks and savings banks are robust and in good shape. but this should not blind us to the major challenges and the associated need for adjustments that banks face. elevated interest rate risk and the low level of risk provisioning increase vulnerability to shocks. i would therefore call on banks to focus their risk management operations primarily on the issues of maturity transformation and interest rate risk. 5. brexit will represent a challenge let me round out my remarks by discussing a challenge faced by all of us and which is having a particular impact on institutions. in all likelihood, the united kingdom will be leaving the european union on 29 march 2019. in that respect, no press conference on financial stability can avoid the topic of brexit. i will therefore address this topic in the remainder of my remarks. the negotiations ’ progress has tended to be on the sluggish side, creating considerable uncertainty for everyone : citizens, companies and not least the financial sector. in the 16 months that remain, the brexit - related restructuring has to be completed in order to ensure the uninterrupted continuation of customer relationships between economic areas. in this connection, i urgently advise all financial market participants to begin reorganising their operations as soon as possible, and to implement this process rigorously. this means, in particular, that all those banks seeking to continue to do business in germany or in other eu countries once the uk leaves the eu should, if they have not yet done so, file applications for licences as fast as possible. solutions also need to be found with regard to how existing contractual relationships will be continued seamlessly after brexit. for those institutions which change their contracts proactively hoping for their customers ’ tacit approval, legal risks could ensue, at least concerning retail customers. time will ultimately be the decisive factor. for the uk to achieve the smoothest possible exit from the eu, meticulous preparation by the banking industry is not the only thing that will be necessary. the preparations – or rather, the lack thereof – in the real sector give me cause for concern. companies should put their own access to financial services on a solid footing, and vulnerabilities that the uk leaving the eu will create for their own business models need to