Let me remark that here, as a benchmark scenario, I’ll consider a hypothetical situation in which the ECB has returned to the pre-crisis framework. That is, to a system whereby it determines the aggregate liquidity provided to the banking sector in each open market operation by conducting variable rate tenders, with a fixed liquidity supply and a variable rate.
There are three areas in which the new regulation can interact with the central bank’s operational framework. First, the demand for reserves. Second, the participation in the central bank’s longer-term operations. Third, the impact on the collateral pledged to the central bank.