funding pressures ( graph 11 ). these swap lines effectively provided unlimited us dollar funding to these banks ( again against appropriate collateral ). graph 11 bis central bankers ’ speeches the swap lines ran off in early 2010 and while the major central banks maintained them at 7 - day terms, they were barely utilised. in september 2011, three - month terms were re - introduced by the major central banks. but despite the recent tensions in us dollar funding markets, recourse to these central bank us dollar swap lines with the fed has been negligible. at the ecb ’ s threemonth auction conducted in mid october, the take - up was only us $ 1. 4 billion in aggregate by six banks. nevertheless, the major central banks will conduct further us dollar liquidity operations with maturities of around three months in november and december. turning now to look at the australian banks ’ offshore funding, there are some important differences to the situation in europe. graph 8 also shows that the cost of swapping australian dollars for us dollars has not increased in the most recent episode and indeed has gone negative at times. there are some fundamental differences in the nature of the australian banks ’ offshore funding. the funding that the australian banks raise offshore, in us dollars predominantly, is swapped back into australian dollars to fund australian dollar assets. that is, the australian banks are funding australian dollar assets, not us dollar assets. thus, if they experience increased difficulty in accessing us funding markets, this is resolved by sourcing australian dollar liquidity, including in stressed circumstances from the reserve bank, 12 rather than trying to source liquidity in a foreign currency. the swaps are generally of the same maturity as the funding, so there is no maturity mismatch. moreover, given the use of csas and the net underlying position of the australian banks, in the event of a depreciation of the australian dollar, such as has occurred in the past two months, the australian banks receive large inflows of us dollars into their collateral accounts, effectively increasing their supply of us dollar funding. in contrast to the recent experience of some european banks, the australian banks have found that us mmfs have been more than willing to maintain their exposures, including at longer maturities. indeed, recently the australian banks have been beneficiaries of a reallocation by the mmfs away from the european banks. conclusion the banking system globally has been under scrutiny for much of the past four years to varying degrees

2011 and settlement on 11 august 2011, and will mature on 1 march 2012. the governing council also decided to continue conducting its mros as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the last maintenance period of 2011 on 17 january 2012. this procedure will also remain in use for the eurosystem ’ s special - term refinancing operations with a maturity of one maintenance period, which will continue to be conducted for as long as needed, and at least until the end of the last quarter of 2011. the fixed rate in these special - term refinancing operations will be the same as the mro rate prevailing at the time. furthermore, the governing council has decided to conduct the three - month ltros to be allotted on 26 october, 30 november and 21 december 2011 as fixed rate tender procedures with full allotment. the rates in these three - month operations will be fixed at the average rate of the mros over the life of the respective ltro. let me now explain our assessment in greater detail, starting with the economic analysis. in the first quarter of 2011 euro area real gdp posted a strong quarter - on - quarter increase of 0. 8 %. data and survey releases for the second quarter point towards ongoing real gdp growth, albeit, as expected, at a slower pace. this moderation also reflects the fact that the strong growth in the first quarter was in part due to special factors. the underlying positive bis central bankers ’ speeches momentum of economic growth in the euro area remains in place and continued moderate expansion is expected in the period ahead. euro area exports should continue to be supported by the ongoing expansion in the world economy. in addition, the present level of consumer and business confidence in the euro area supports private sector domestic demand. however, growth dynamics are currently weakened by a number of factors contributing to uncertainty, and activity is expected to be dampened somewhat by the ongoing process of balance sheet adjustment in various regions and sectors. in the governing council ’ s assessment, the risks to this economic outlook for the euro area remain broadly balanced in an environment of particularly high uncertainty. on the one hand, consumer and business confidence, together with improvements in labour market conditions, could continue to provide support to domestic economic activity. on the other hand, downside risks may have intensified. they relate to the ongoing tensions in some segments of the euro area financial markets as well as to global developments, and the potential