According to MMSR data, euro area government bonds represent more than 80% of the collateral used. Second, the supply of safe private collateral is necessarily scarce12, while the supply of safe public collateral has fallen on account of both a decline in net issuance and the downgrades in sovereign credit ratings. For example, the share of euro area bonds rated AAA by at least two rating agencies has fallen from levels around 60% before the great financial crisis to around 20% today. In other words, safe debt is in short supply and debt in long supply is less safe.13 This is also why the Governing Council’s decision of 26 October, when it decided to extend the horizon of its asset purchases by another nine months, and to reduce the pace of monthly purchases to € billion, emphasised the contribution of the stock of acquired assets, together with forthcoming reinvestments, to providing continued monetary support. 6 / 10  BIS central bankers' speeches  Financial regulation and repo market activity Asset purchases are not the only factor affecting supply and demand conditions in cash and repo markets. This brings me to the second part of my remarks. As you know, a number of liquidity regulations affecting banks, such as the net stable funding ratio (NSFR) and the liquidity coverage ratio (LCR), require banks to hold a sufficient quantity of high-quality liquid assets.
We are also working on the inclusion of these risks in the stress test methodology for the Spanish financial sector. In sum, banks and supervisors alike are moving along this path, which poses all sorts of challenges. For instance, it is in no way straightforward to envisage these risks as part of the commonly used valuation and measurement methodologies. Moreover, there are cultural factors hampering their inclusion, which calls for involvement from the uppermost levels of organisations. And, above all, one of the main challenges is the lack of information, which enormously hinders further progress. Allow me briefly to refer to these valuation-based aspects and the absence of data. Traditionally in finances there is a tendency to value investments exclusively from the standpoint of economic return. The classic focus of study in finances would be cash flows; once capitalised or discounted, these enable us to compare different investment options. From a theoretical standpoint, responsible investment reminds us that we should not value and compare different investments looking solely at an Excel chart. Rather, we should perhaps look at variables that are not directly monetisable in the expected return on each investment. Measuring this “non-monetisable” return is clearly not straightforward. The approach being followed focuses on the measurement of “impact”. For example, environmental sustainability has for some time used measurements that take “footprints”, be they carbon, hydric, environmental, etc.