• Will continue to phase out extraordinary liquidity steps depending on market economy
  • Keeping liquidity for too long would foster bank dependence, weaken restructuring incentives
  • Share of dollars in fx reserves rose to 78.5% by end 2009. Yen holdings fell to 21.5%. 2009 fx reserves worth 38.3 bln euros
  • Outlook for euro area banking system stability is clouded by significant risks
  • Caution needed on durability of banking profit recovery
  • Supportive environment for investment banking unlikely to last as markets normalise
  • Too early exit of government support risks leaving banks vulnerable to disturbances, renewed system stress
  • Too late exit risks distorting competition, creating moral hazard, fuelling excessive risk taking
  • Banks which have received aid may need fundamental restructuring to be viable long-term