[Slide 4: Government bonds with negative yields] While low or negative rates and the asset purchase programmes are needed to provide sufficient monetary stimulus, a number of observers have voiced concern about their impact on the behaviour of economic agents, on the resilience of financial intermediaries and, ultimately, on financial stability.5 Today, I will offer some thoughts on these issues, focusing on the banking sector, which plays a key role in the transmission of monetary policy in the euro area.
The specialness of negative nominal interest rates So what makes negative rates special? [Slide 5: The specialness of negative nominal interest rates] The first answer is cash. Since cash (i.e.