Should this reduction occur – which seems highly unlikely, but at this juncture it is difficult to quantify the precise extent – the ability of the central bank to control short-term rates, and thus to signal its monetary policy stance, might be affected. The ECB could adapt its liquidity management practices in order to guarantee a continued high demand for short-term refinancing.
5.1.3  Collateral pledged to the central bank  The third area in which the new regulation could interact with the central bank’s operational framework is the collateral pledged to the central bank. As you know, all refinancing by the Eurosystem is provided only against the provision of adequate collateral, so as to protect it from losses should a counterparty default.