The references for the lecture can be found on the Deutsche Bundesbank’s website. *  1  *  *  Introduction  It is obvious that interest rates play a key role in monetary policy today. On the one hand, the instrument of most central banks is a short-term interest rate.
Return on equity has also been improving. And there is ample liquidity system-wide. This stable banking system has been critical in underpinning a stable macroeconomic environment. And sustained stability in our macroeconomic environment in the last few years has also avoided the build up of dangerous imbalances that could have led our banking system astray. III.