However, banks are the main source of funding for the non-financial private sector in the euro area and, thus, the main channel of transmission of our measures.
If the adverse impact of our measures on bank profitability becomes – or is expected to become – too large, banks’ capacity to lend may decline, and we would not achieve the more favourable financial conditions we seek. Thus, a profitable and well-functioning banking sector is essential to ensure a good transmission of our monetary policy measures.