First of all, there is open market operations (OMO) for injecting or withdrawing liquidity; second, the PBC can adjust money supply with central bank lending and central bank discount; third, depository financial institutions can be required to park deposit reserves in the PBC; additionally, we can also supply liquidity to the market with the medium-term lending facility (MLF), the standing lending facility (SLF) and other tools.
And although the lowering in the form of fiscal consolidation has been crucial to prevent the euro area from careening off the road, at the same time, the reduced ground clearance makes it harder to cushion bumps – meaning that it may become more difficult to respond fiscally to negative economic developments in the euro area.