Sovereign bond and bank lending rates in some countries increased dramatically, thereby impairing access to financing of the real economy. BIS central bankers’ speeches  1  To safeguard the singleness of monetary policy and to ensure an effective transmission of the ECB’s policy intentions to the broad economy, in August, the Governing Council announced its readiness to undertake Outright Monetary Transactions (OMT).
OMTs have proven to be an effective backstop against unfounded fears of reversibility. Strict conditionality contains moral hazard on the side of governments. It ensures that they will adopt the reforms that are necessary to secure their solvency and to foster conditions of steady growth for their economies.