behalf of the governing council, on the occasion of our last monetary policy decision meeting earlier this month. as regards liquidity - providing operations, the governing council decided to conduct them in the second quarter of 2011 on the same conditions as in the first quarter of 2011. this means that we will continue to apply fixed - rate tender procedures with full allotment in all our refinancing operations at least until mid - july. ii. interaction between banks and sovereign debt let me now turn to the specific topics you have asked me to address and start with sovereign debt. i should like to emphasise once again that the right way to avoid the risk of sovereign debt crises in an economic and monetary union is through sound national macroeconomic policies and strengthened economic governance. at the same time, the governments have considered that a permanent crisis management mechanism would be useful. from the side of the european central bank, the design of such a mechanism is essential for it to provide a positive contribution to financial stability in the euro area as a whole. i would like to highlight two aspects : first, the mechanism may in no way weaken the incentives for sound fiscal and macroeconomic policies pursued in all member states. it must in particular not weaken incentives for preemptive fiscal and macroeconomic adjustment by countries concerned, thereby avoiding moral hazard. second, given that the euro area is characterised by an exceptionally high degree of economic and financial integration among countries, the mechanism should be able to employ a range of instruments to be effective in stemming against contagion in situations of acute market instability. if indispensable, supporting countries while still keeping some market access, may be an appropriate way and would imply a prudent use of funds. in this context, i continue to consider secondary market interventions as a helpful tool in this context. regarding the institutional method to set up the esm, the ecb, like the parliament, supports the largest possible recourse to the union method. it would welcome that, on the basis of the experience gained, the esm could become a union mechanism at the appropriate point in time. in the meantime, the ecb encourages that the assessment of circumstances leading to the activation of the esm and the conditions on financial assistance entail an appropriate involvement of union institutions, thus benefiting from their expertise and their union - wide perspective. turning to the issue of bank resolution, the presence of sound bank resolution mechanisms, limiting the costs associated to a bank failure in the case of a cross

inflation to levels that are below, but close to, 2 % over the medium term. regarding fiscal policies, an ambitious and coordinated fiscal stance remains critical, in view of the sharp contraction in the euro area economy. measures taken in response to the pandemic emergency should as much as possible be targeted and temporary in nature. the three safety nets endorsed by the european council for workers, businesses and sovereigns, amounting to a package worth €540 billion, provide important funding support in this context. at the same time, the governing council urges further strong and timely efforts to prepare and support the recovery. we therefore strongly welcome the european commission ’ s next generation eu proposal, which is dedicated to supporting the regions and sectors hardest hit by the pandemic, to strengthening the single market and to building a lasting and prosperous recovery. it is important for the european leaders to quickly agree on an ambitious package. in order to reach its full potential, the european union ’ s recovery and resilience facility will need to be firmly rooted in sound structural policies conceived and implemented at the national level. well - designed structural policies could contribute to a faster, stronger and more uniform recovery from the crisis, thereby supporting the effectiveness of monetary policy in the euro area. targeted structural policies are particularly important to rejuvenate our economies, with a focus on accelerating investment in priority areas such as the green and digital transitions. we are now ready to take your questions. 3 / 3 bis central bankers'speeches