Germany has opened the debate; the Netherlands have shown the way with the announcement of the creation of an investment fund for the future. Low rates, here and elsewhere, can provide an opportunity to finance investments if – and only if – those investments deliver increased potential growth: the ecological transition, digitalisation, education and research. For that, we need – finally! – to focus our fiscal debate on the quality of our spending and investment, and not just on its quantity. At the European level, we have considerable borrowing capacity: we should use it, as soon as we know how to choose these priorities properly, beyond the success of the Juncker Plan or of InvestEU. **  Page 14 of 14  I shall conclude with a more “philosophical” consideration: interest rates are also the price of time. My generation created the euro and tried to tackle the financial crisis. Yours is inheriting a world that is equivocal, to say the least: the positive explosion of innovation and interdependencies, but also that of climate threats and inequality, and all with a worrying weakening, the world over, in public governance. A low price of time is as much a threat as an opportunity: a threat if we give in, in the short term, to the ease of abundant liquidity and allow financial instability to grow; an opportunity if we use low rates collectively to invest in the future, from the ecological transition to education. You can count on our determination to act on the monetary side.
Thus, even under extreme market conditions, covered bonds would remain attractive, at least in relative terms. 1/3  BIS central bankers' speeches  Role in balance sheet of banks While covered bonds provide investors with a broad range of options to the investment opportunity set and contribute to deep and liquid markets, they also impact banks’ balance sheets. When banks use covered bonds as a source of funding, a proportion of the banks’ assets become pledged to covered bond creditors. One issue that arises is what effect this may have on the quality of the balance sheet of banks. At the outset, a banking group’s liquidity and credit risk will rise since covered bonds reduce the volume of encumber-able assets available to the bank. In addition, banks are often both significant issuers and holders of covered bonds. Such interconnection may increase systemic risk. However, market participants may assume that resolution rules and liquidity and capital requirements nonetheless limit the risk. For example, all banks are subject to regulation of their core equity – notably through the Basel III standard of the Basel Committee, implemented in Europe through the CRD4/CRR regulation. This is the primary insurance for tax payers and investors against the potential failure of large banks. Sufficient equity and a resilient banking system will always be the main instruments to ensure stability in the financial system as a whole. This is why senior bonds are also considered a relatively safe asset.