In particular, liquidity obtained in the Eurosystem longer-term refinancing operations, which have a three-month maturity, would not count as liquidity outflow, at least not for the first two months in which the outstanding maturity is still longer than 30 days. For regulatory purposes, banks might thus try to shift their participation in the ECB’s open market operations from the one-week to the three-month operations.
Though lenders will be viewing new transactions with greater caution than they did a couple of years ago, both bankers and their supervisors should now guard against allowing the pendulum to swing too far the other way by adopting policy stances that cut off credit to borrowers with credible prospects.