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It could also provide near unlimited liquidity through yet another huge long term refinancing operation.
"We are highly confident that we have ample liquidity through 2009," he told reporters.
As things stand, we expect the ECB to continue to boost liquidity through another LTRO.
It cut rates to a record low and swamped the banking system with liquidity through three-year refinancing operations.
Instead, it decided on a small increase in liquidity through the purchase of short-term government bonds.
Artificially pumping up market liquidity through too-big-to-fail subsidies to market makers is not a good idea.
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"Through capital, through restrictions in activities, through liquidity requirements, through executive compensation, through a whole variety of mechanisms, it's important that we limit excessive risk-taking, particularly when the losses are effectively borne by the taxpayer," Mr. Bernanke said.
Next up is Christopher Bowdler, a fellow in economics at Oriel College, University of Oxford.surveysDespite a range of constraints on its ability to launch unconventional monetary policy measures, the ECB has played a key part in managing the Eurozone crisis, particularly through large scale and long maturity liquidity injections through its Long-Term Refinancing Operations. Long-Term Refinancing Operations
It said that it would rapidly expand banks' sight deposits, a liquidity facility through which banks can withdraw money, to 120 billion francs from 80 billion francs.
It will no longer mop up the liquidity created through its remaining holdings of peripheral government bonds purchased between May 2010 and February 2012, which are currently worth €165 billion.
To increase the chance of obtaining this liquidity, either through an I.P.O. or from private financing, Mr. Rufrano is making the firm more financially open.
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