Put simply, the mechanism according to which losses go into the profit and loss account applies to both the ECB and the national central banks. If a net loss remains even after taking into account all provisions and reserves, it could be recorded on the balance sheet as losses carried forward and be offset by any net income in the following years. It is important that it is understood from the principle of financial independence that a central bank needs to be adequately capitalised in the long term. But in no way does it follow from this that all losses carried forward would have to be offset immediately and in full by the capital holders or Member States. Conclusion To conclude, I would like to summarise my arguments. The announcement of OMTs was and is the necessary and appropriate step to eliminate the disruption in the transmission of monetary policy caused by concerns that there would be an unwanted break-up of the euro. The risks of not acting would have been greater. The ECB and its decision-makers are aware of the limits of its monetary policy mandate. Our measures are aimed at maintaining monetary policy transmission and preventing an unwanted break-up of the euro. It is not allowed to, is not able to and does not want to replace the actions of democratically elected governments. Quite the opposite. The OMT programme is therefore aimed at protecting the market mechanism so as to urge the Member States to make the necessary reforms.
Furthermore, the central banks of the Eurosystem observe the issuing behaviour of Member States, banks and market players for signs of collusion. If, for example, a country were to convert all its bond issues to a short maturity (of up to three years), we would react. BIS central bankers’ speeches  3  Possible consequences of the ECB’s measures for national budgets The rapporteur has also asked us to address the possible consequences of our measures for national budgets. Of course, conducting monetary policy will always be associated with risks. For this reason, central banks hold capital and set aside funds for provisions and reserves as a pre-caution. This adds to their financial independence. In view of the expansion in balance sheets in previous years and the added risks associated with this, the central banks of the Eurosystem have further strengthened their financial buffers. By the end of 2012, funds for provisions had increased to € billion and those for reserves to € billion. The Eurosystem is obliged to keep financial risks under control as best it can. The institutional framework for OMTs is therefore designed in such a way that risks for the Eurosystem are manageable and controllable, for example through the aforementioned orientation of the programme towards short-term maturities. The risks associated with OMTs would materialise only if a Member State operated un-sound policies and failed to service its debt.