At the same time, inflation has been quite low and shows few signs that it is in the process of picking up. Recently, some observers have been calling for the Federal Reserve to begin the tightening process sooner rather than later. In a few cases, the reasoning appears to be that we are risking a major increase in inflation by waiting.
For the Eurosystem’s refinancing operations, solvent counterparties and sufficient collateral are crucial. When I mention counterparties, please allow me to briefly address one current point of interest in financial markets on both sides of the Atlantic: US dollar funding of European banks. This is certainly an area that relevant authorities, including the Bundesbank, monitor closely.