t negligible for companies and households. the policies combating fragmentation in the euro area have borne fruit ; now when interest rates for government borrowing fall it has a noticeable effect on corporate borrowing costs across the euro area – which was not the case even two years ago. that ’ s essential if investment is to recover. sure, rates are already low, but since qe was announced and implemented at the start of march long and very long - term interest rates have fallen significantly in all countries, including germany and france, and even more in spain, italy and those most affected by the crisis, such as ireland and portugal. the third channel works through portfolio rebalancing : it ’ s still too soon to assess that. bank and non - bank investors who sell us their securities have a very strong incentive to invest elsewhere rather than leave their money doing nothing, with deposits at the ecb costing - 0. 20 % p. a. the sharp upturn in the real economy should encourage them to lend more to business. in that sense, the time is right : the impact of qe is being felt just as the recovery is being confirmed, and it will reinforce it. it ’ s a mechanism that is potentially powerful. the final channel, of course, is the exchange rate : this is not an objective in itself, but it reflects market participants ’ expectations of the different monetary policies being pursued on each side of the atlantic. if you include the oil price too, you have a combination of factors favouring recovery and investment. so as things stand right now, there is no reason to worry about the euro area recovering in 2015 and 2016. mind you, all these factors are short - term. one possible concern is the ability to boost the potential growth of the euro area, which has been hit hard by the crisis. that ’ s more a long - term issue, though. aren ’ t you afraid that one of the effects of qe will be to create price bubbles for certain assets? doesn ’ t that risk clash with the price stability objective? does the ecb have the means to combat these side effects? our actions do have an impact on asset prices ; you just have to look at the way markets have risen since the public asset purchases started. we monitor risks to financial stability very closely : tommaso padoa - schioppa used to say this was in central banks ’ dna. but let ’ s not forget that the objective of monetary policy is price stability

. however, the risk report would show much more extensive information, such as the term and interest rate of the assets, their credit quality, and the range of values the portfolio would take under alternative future scenarios. the user of the report could tell if changes in value were due to declining credit quality, rising interest rates, or sales or payoffs of loans. by tracking the amount of loans in each internal credit grade and the amount of allowances or " provisions " set aside in each " bucket " for inherent losses, the user of the report could determine whether the credit risk of the portfolio was increasing or decreasing. other reports that risk officers are developing provide information on the extent to which the total return in a particular line of business compensates for its comprehensive risk. on an enterprise basis, a reader would be able to tell if the growing lines of business have risk exposures that tend to be offsetting and that thereby make the earnings of the corporation as a whole less volatile. financial institutions should continue improving their risk management and reporting functions. when they are comfortable with the reliability and consistency of the information in these reports, they should begin disclosing this information to the market, perhaps in summary form. not only would this disclosure provide more qualitative and quantitative information to the market, but the resulting discussion about risk management practices would help the market assess the quality of the risk oversight and risk appetite of the organization. banking supervision and accounting and disclosure the federal reserve has long supported sound accounting policies and meaningful public disclosure by banking and financial organizations with the objective of improving market discipline and fostering stable financial markets. the concept of market discipline is assuming greater importance among international banking supervisors as well. the most recent proposal to amend and augment the basel capital accord, which was published in january 2001 and called basel ii, seeks to strengthen the market's ability to aid bank supervisors in regulating capital adequacy. it consists of three pillars, or tools : risk - based capital ( pillar i ), risk - based supervision ( pillar ii ), and disclosure of risks and capital adequacy to enhance market discipline ( pillar iii ). this approach to capital regulation, with its marketdiscipline component, signals that sound accounting and disclosure will continue to be important aspects of our supervisory approach for many years to come. our goal in the basel process is to develop a risk - sensitive framework that provides appropriate incentives to banking organizations to maintain strong capital positions and sound risk - management systems. the