Recent history certainly teaches us that understanding what drives a counterparty’s financial performance and its risk appetite is necessary now for accurately pricing any transaction or even for deciding whether to engage in a transaction. Improve your organization’s disclosure with every financial report--and begin now.
So, instead of trying to achieve the impossible task of describing the precise policy response to any conflict, I will say something briefly about the framework we use in assessing the issue. An obvious but sometimes overlooked point is that ECB monetary policy is based on an comprehensive assessment of the outlook for price stability.