A breakdown of banks by size Against this background, it is not surprising that banks’ balance sheet constraints played a greater role during the recent financial turmoil, leading to a tightening of credit standards by banks, as shown in Chart 2. The bank lending survey for the euro area, from which this information is taken, distinguishes between large banks and smaller banks. In particular with respect to the greater relevance of smaller banks for SME financing, it is therefore of interest to distinguish between the lending  2  BIS Review 129/2009  of large banks and that of smaller banks in the euro area. Since mid-2007, and in particular during the initial phase of the financial turmoil, large banks have overall tightened their credit standards for loans to enterprises somewhat more than smaller banks. The outlook for the economy in general and for individual firms contributed most to the tightening, in Italy as well as in the euro area as a whole. The deteriorated access to capital market financing during the financial turmoil contributed significantly to the tightening of credit standards. It played a much more important role for large banks than for smaller banks, which rely less on capital market financing. The difficult liquidity conditions in the market also played a somewhat more important role for large banks, possibly because money market financing represents a greater share of their overall financing. All this may explain why the net tightening of credit standards was greater for large banks than it was for smaller banks.
The importance of central clearing for central banks and their monetary policy mandate So precautions have to be taken to ensure that CCPs do not become a weak point for monetary policy and the currencies issued by central banks. CCPs can pose significant risks to the smooth operation of payment systems and to monetary policy transmission in times of market stress. Let me give you some examples. Market volatility or failures in CCPs’ risk management may affect liquidity within the financial system and that of CCP users, who are typically monetary policy counterparties and key 1/5  BIS central bankers' speeches  participants in payment systems. In extreme situations, liquidity shortfalls could foster contagion and lead to CCPs and banks becoming distressed. This could mean the ECB needs to provide liquidity to systemic CCPs or to their members to ensure that payment systems continue to function smoothly and that monetary policy can be transmitted effectively. It is clear that, in such cases, liability and control need to be well aligned: the ECB must be able to monitor and control the risks posed by CCPs. CCPs are also directly relevant for payment systems. Cleared markets represent a significant share of financial markets as a whole, meaning that CCPs are settling large payment volumes. In order to ensure that payment systems continue to function smoothly, the ECB must ensure that CCPs have appropriate arrangements in place for liquidity management and settlement in euro.