such a “ default liability ” can also not be deduced as a general rule under union law in respect of the individual member states when the central bank ’ s equity is drastically reduced. in accordance with the principle of financial independence as established by article 130 of the treaty on the functioning of the european union it follows that a central bank must permanently have adequate equity available to fulfil its monetary policy tasks within the eurosystem. however, this does not mean that every loss must be immediately and fully offset by private or public shareholders or the member states. a central bank can in the short and medium - term, even with reduced or negative equity, fulfil its eurosystem monetary policy tasks. in this respect a reduced or negative equity does not preclude from the outset an orderly and stability - oriented monetary policy. only when this situation continues for too lengthy a period – the european central bank ’ s last convergence report spoke of “ a prolonged period of time ” – would doubts arise as to whether the central bank can still adequately fulfil its eurosystem monetary policy tasks. only in such an extreme case – and exclusively in this case – would they be recapitalised, not immediately, but – again in the words of the european central bank ’ s convergence report – “ within a reasonable period of time ”. conclusion mr chairman, distinguished members of the second senate, i and my colleagues are at your disposal for further questions on these and other issues. bis central bankers ’ speeches

only to omts but also to main refinancing operations, to cite just one standard monetary policy instrument as an example. the eurosystem uses main refinancing operations to make central bank money available to banks. in principle, these bank loans could also fail, even though the risk of this occurring is slight. therefore, the european central bank ’ s governing council limits these risks, by requiring the provision of bis central bankers ’ speeches collateral for main refinancing operations. the european central bank ’ s governing council has also taken precautions with regard to omts in order to limit the eurosystem ’ s financial risk. this is done, in particular, by applying a requirement of strict conditionality and the monitoring of the satisfactory implementation of the programme. this strict conditionality, compliance with which is to be independently assessed by the european central bank from the monetary policy perspective, ensures that the member states concerned apply sufficient budgetary discipline and carry out structural reforms, to achieve a sustainable budgetary position. for the implementation of omts, as for other monetary policy operations of the european central bank, creditworthiness and risk management rules apply. in this way an excessive default risk is avoided. it should be added, that the european central bank will not carry out any purchases using omts during the review of an esm assistance programme. this also ensures that market conditions are not directly influenced by european central bank purchases whilst the programme is being assessed by the troika. the comparison between omts and main refinancing operations demonstrates that the financial risks of various monetary policy instruments differ as to their degree but not as regards their principle nature. thus the court of justice of the european union held in its judgment that the precautions foreseen for omts are likely to reduce the risk of losses. it also recalled that a central bank, such as the european central bank, has a duty to take decisions that, like open market transactions, inevitably involve a risk of floss. with regard to the necessity mentioned in the hearing outline, in connection with the potential risks of omts for the federal budget, for a recapitalisation of the bundesbank, i would confirm the position of the european central bank that was provided in the last oral hearing. as far as i am aware, under german law there is no obligation for the federal government to recapitalise the bundesbank, even when its losses are of such a magnitude that its equity base is threatened.