Effective supervision and the orderly resolution of banks thus also support the ECB’s monetary policy mandate. It helps the central bank to carry out its task, that is, to provide liquidity assistance, without it having to worry about overstepping its mandate.
Improving the monetary policy transmission The Eurosystem offers liquidity to banks to maintain financial intermediation in the money market and to improve the transmission of monetary policy. For this transmission to work optimally, a stable financial sector is needed. For banks are the most important channel via which our monetary stimulus is passed on to businesses and households.