The tools of intervention have been chosen based on the characteristics of the financial system, the origin of the tensions and the institutional structure: we have aimed first and foremost to support the liquidity of the banks, which in the euro area, more than elsewhere, play a pre-eminent role in financing the economy, and to prevent sovereign debt market distortions from impeding the proper transmission of monetary policy.
We remarked a year ago that the levels to which sovereign interest rates had risen in many countries of the area reflected not only the deterioration of national growth and fiscal prospects, but also a systemic risk factor, subsequently called “redenomination risk”, connected with fears of a break-up of the monetary union, due in part to the incompleteness of its institutional design.