Following the ECB’s decision to immediately and sharply reduce interest rates in the aftermath of the Lehman bankruptcy, this phase was marked by the decision to conduct many different types of operations to refinance banks. The immediate objective of these operations was to ease unwarranted liquidity constraints for financial institutions, arising from the malfunctioning of the money market and bank funding markets in general.
Our measures ensured that solvent but illiquid institutions could continue to have access to our primary liquidity provision.