We do this, but – I also realise – we could do better: we have to steadily adapt our communication channels and satisfy the increased demand for clear and timely information in the unconventional times we are passing through. It is also clear to us that any additional task entrusted to the ECB (such as banking supervision, currently under discussion) must be matched by additional reporting and accountability channels. Looking ahead: completing the architecture of EMU Let me conclude. The euro deserves trust – and trust in the euro as a currency depends on trust in the euro as a project. The ECB, with the legitimacy provided by the fulfilment of its mandate, will do everything within this mandate to ensure price stability in the euro area and therefore trust in the euro as a currency. But trust in the euro as a project relies on a more complex framework and structures. 4  BIS central bankers’ speeches  In a recent article, 6 the German philosopher Jürgen Habermas and his co-authors argue that a rallying cry of the American War of Independence – “No taxation without representation” – has a new and unexpected resonance in today’s Europe. Once we create scope in the euro area for policies that result in redistributive effects across national boundaries – they write – European legislators who represent the people must be able to decide and vote on these policies. I tend to sympathise with this view.
So far, the ECB has consistently adopted the second approach to non-standard policies. In the early phase of the crisis, we re-absorbed the liquidity risk and the market counterparty risk that banks were facing in interbank transactions. In keeping with this second approach, the aim was to repair the functioning of the market, not to add stimulus in a situation in which the policy rate was still positive. OMTs, as their name suggests, will operate through outright transactions, not lending operations. But, in essence, they have the same purpose as the non-standard measures we adopted in 2008 and 2009: to price out a type of catastrophic risk premium that investors demand in conditions of market paralysis. It was break down risk in the early stage of the crisis, the risk that the payments system would seize up completely. It is break- up risk now. 5  The policy intervention works by reducing the supply of long-duration securities considered as risk-free and increasing the supply of zero-duration reserves. To the extent that private investors do not view these assets as perfect substitutes, in order for private investors to be willing to make those portfolio adjustments, the expected return on the long-duration securities has to fall. With less duration risk to hold in the aggregate, the market should require a lower premium to hold that risk.