Management report 13 In this situation ECB President, Mario Draghi, announced that if needed the ECB would make unlimited purchases of sovereign bonds issued by the member states of the European Monetary Union to ensure the continued stability of the euro and the eurozone. Up until the end of the year none of the member states had accepted the ECB’s offer to help. However, the announce- ment that the ECB was prepared to offer assistance was enough to calm the markets. “Pfandbriefe proved to be a stable refinancing tool once again in 2012.” Declining interest rates and the comparatively good profitability noted for German companies fuelled a significant rise in the German stock index (DAX) over its previous year’s performance. Investor interest in stocks rose due to high dividend yields paid by DAX firms and a lack of investment alternatives. As a result, during the course of the year the DAX climbed 29 percent over the previous year. Most of the European stock markets recorded smaller gains. 1.0 1.5 2.0 2.5 January February March April May June July August September October November December yield on ten-year bunds 2012Figures in % Source: Bloomberg Driven by the ongoing sovereign debt crisis in Europe, the US dollar initially posted gains over the euro during the year and increased to 1.20 dollar per euro. However, following the announcement the ECB’s bond purchase programme by ECB President Darghi, the trend reversed and the euro was able to recover its losses by the end of the year. In the USA, the Fed stated that it intended to continue its expansive monetary policy and said that it will only re-examine this policy following a notable improvement in the US labour market. The change in government in Japan also led to a switch in the Japanese central bank’s monetary policy which became far more expan- sive and was intended to weaken the yen and overcome defla- tion. The Swiss central bank maintained its announced exchange rate cap of 1.20 Swiss francs to the euro. Pfandbriefe proved to be a stable refinancing tool in 2012. Never- theless, the volume of new issues fell substantially in compar- ison to the previous year’s figure due primarily to the notably lower volume of new Public Pfandbriefe issues. During the year under review a total of € 106 billion worth of new euro-denomi- nated benchmark covered bonds were issued. At the beginning of the year issuers located in core eurozone countries, above all others, benefited from the enormous volume of liquidity made available by the ECB. Issuers located in the peripheral