But they require that we deploy monetary policy instruments that are effective in an environment of balance sheet adjustment – which is precisely what the ECB has done. Specifically, we have launched measures designed to ensure that, even as banks continue to deleverage, they still have incentives to price and originate credit to the real economy in a regular fashion.
Those measures include, most notably, our credit easing package consisting of the Targeted Long-Term Refinancing Operations (TLTROs) and Asset Purchase Programme (APP). Monetary transmission has also been supported by expanding the APP to include public sector securities. These instruments have had a strong impact and have contributed to the lowering of marketbased financing costs for both banks and non-financial corporations (NFCs).