While it is widely recognised that rising exports could effectively reduce debt service burden, for the LICs the quantum of exports has fallen short of the desired target. In this context, there is a need to focus on remittances as a supplementary source of resources to mitigate debt service burden.
Overnight deposits at euro area banks have shown an upward trend in relation to banks’ total deposits until about mid-2022 (Slide 11, left-hand side). [15] As a result, the risk of withdrawals or portfolio rebalancing has increased. The rise in overnight deposits is in part a mechanical effect of asset purchases, which increase deposit holdings of those selling bonds to the Eurosystem.