Whereas variable-rate debt reflects changing interest rates almost immediately, fixed-rate debt does so only over time. While at the euro area level around 70 per cent of outstanding loans to households are at a fixed interest rate, this share is as high as around 90 per cent in France and Germany and as low as 25 per cent in Spain and Italy.
The aim is to provide more reserves than banks wish to hold, with the intention that they will try to dispose of these excess reserves by increasing their lending. This type of activity is usually undertaken only when interest rates have fallen to zero or near-zero levels.