This has resulted both from the lower financing costs elicited by the TLTRO, which has created scope for banks to reduce lending rates, and the increased lender competition for good credit it has spurred. These patterns are again confirmed by the responses to the BLS 9. Micro evidence confirms that the negative DFR has empowered the APP, too.
The longer-term objectives of building up the foreign reserves to a more comfortable level, of reducing the role of the Reserve Bank in the forward foreign exchange market, and of phasing out the remaining foreign exchange controls were temporarily forced on the backburner, whilst monetary policy had to be directed more decisively towards an adjustment programme that would gradually restore stability in the market for foreign exchange.