Still, capital strengthening must continue. While this may automatically reduce the return on capital, at the same time it favours its stability. By increasing banks’ ability to withstand adverse shocks it boosts investor confidence and lowers the cost of external funding. Exposure to the public sector has increased significantly since the beginning of 2012.
We have said since the very beginning of the financial turbulences that we would have the monetary policy stance, that would be designed to deliver price stability in the medium term and we would implement that monetary policy and refinance the banks on the money markets in order for the short term interest rates in the money market to be as close as possible to our policy rates.