As decided by the ECB Governing Council, the Eurosystem will reinvest the proceeds from maturing bonds “for an extended period of time and, in any case, for as long as necessary”. This keeps the level of excess liquidity high.
There will therefore continue to be significant bond holdings on the central bank balance sheet – and, accordingly, an expansionary monetary policy stance – for a while longer. To a certain extent, it is like driving a car: by reinvesting, the Eurosystem is keeping its foot on the accelerator. But we are not pressing any harder by making more net purchases.