The term-loan facility that we are considering should have little stigma attached to its use, because it will be offered at the Bank's discretion at times of stress that involve more than one deposit-taking financial institution. 11 The final recommendation in the CGFS report is aimed at limiting moral hazard.
Nevertheless, there is a risk that market valuations may be running ahead of the adjustment processes. The current long-term yields on some European government bonds already appear to have factored in the required adjustment to a large extent. This, however, creates a setback potential. It is therefore all the more important that policymakers ensure that the necessary economic progress is actually achieved.