This development is due to the significant economic progress of the continent of the past several years and to commodity booms, ample global liquidity, and low interest rates. Higher global interest rates could limit the possibilities for governments to finance their projects or budgets on the same favorable terms.
On the liabilities side of the balance sheet, the domestic provision of liquidity via refinancing operations and asset purchases combined with liquidity inflows from other countries led to a considerable increase in deposits during the past year: liabilities related to monetary policy operations were up by € billion compared with the end of 2019, hitting € billion – in other words, nearly doubling.