Monitoring national and sectoral developments is key to understanding the underlying trends in the euro area as a whole with a view to formulating the most appropriate monetary policy response. Consequently, the ECB regularly reviews and analyses all relevant information relating to the various sectors and countries of the euro area.
In view of the predominant role of the banking system in credit provision in the euro area, how banks respond to monetary policy is a central issue in assessing the strength of the transmission mechanism. Accordingly, in our data-dependent approach to calibrating monetary policy, assessing the strength of the banking channel of monetary policy tightening is a first-order task for the ECB.