Central banks have tools to partly alleviate such distortionary effects. The Eurosystem’s securities lending facility, for example, channels bonds bought under our purchase programmes back into the market, improving liquidity. But the larger the portfolio, the less likely it is that liquidity conditions remain unaffected.
Second, it is an honor for me as Governor of the Bank of Israel to be taking part in a conference on the important topic of dollarization, a topic of interest not only to the Central Bank of Turkey, but also to us in the Bank of Israel, and to many other central banks and economies around the world.