From this perspective, flow effects help to signal the central bank’s commitment to providing ample policy accommodation and reassure market participants about the presence of central banks as large and patient investors. 9.
The extraction of duration risk associated with the stock of securities held by the ECB loses potency over time because the residual maturity (and hence the duration) of all securities shrinks over time. And reinvesting maturing securities falls short in terms of making up for this loss.