By being so organized, the bank is performing the economic function of maturity transformation. A deposit, which is potentially demandable at any instance, has effectively been lent out through financial intermediation in the form of a longer-term bank loan that is not making repayments at each instance. And yet… the beauty of the arrangement is that most of the time, this works out.
To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis indicates the need to firmly implement the Governing Council’s monetary policy decisions and to monitor closely all relevant incoming information as concerns their impact on the medium-term outlook for price stability.