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1 Introduction
Ladies and gentlemen,
In response to the high and persistent inflation across the euro area, the ECB has tightened its monetary policy stance. Since last July, we have raised our policy rates by a combined 375 basis points. To support this restrictive stance, the Eurosystem has also started to wind down its asset purchase programme (APP). Since March, we are gradually reducing our bond holdings – currently at a pace of 15 billion euro per month on average until the end of June. We will continue to decrease our APP portfolio at a measured and predictable pace. We expect to stop the reinvestments as of July.
Of course, the tightening of monetary policy has significant consequences for the financial sector. It has put the spotlight on funding, interest rate and liquidity risk. Today, I would like to shine a light on recent developments in Europe's financial markets. I will explain why this is different from 2008, and look at what is next for Europe's financial system.