As a member of the ECB’s Executive Board, I take especial pride in the flexibility and effectiveness that the Eurosystem’s operational framework has exhibited in managing liquidity in the euro money market under stress conditions. But this is an issue that I leave for the next occasion in which I will have the pleasure to meet again this audience.
The increases in asset prices and the expansion in market liquidity enhance the risk tolerance capacity of investors, thereby pushing asset prices further upward. Economic activity is consequentially stimulated. In addition, the two forms of risk-taking channel just I mentioned interact with each other.