There have been spikes in this spread on occasion in the past few months, but they have reflected sharp downward movements in the expected cash rate, rather than upward movements in the bank bill rate.3 Graph 2  To mitigate the impact of the sharp increase in the cost of unsecured interbank lending for European banks, the ECB has recently announced an expansion of its open market operations.
Since May 2010, the ECB has stood willing to provide three month funding to banks in unlimited amount (against acceptable collateral) at its policy rate. At its most recent meeting in early October, it lengthened the maturities for which it was willing to provide this funding to terms as long as 13 months.