The Bank of course retains the ability to relaunch the scheme as necessary and in light of that the MPC judges the effective lower bound to Bank Rate to be now close to but a little above 0%. The ECB’s targeted long-term refinancing operations (TLTROs), first launched in 2014, also built on the experience of the FLS, as part of the three-pronged easing strategy, which also included cuts in the ECB deposit rate into negative territory and the launch of asset-backed security and corporate bond purchase programs. The facility was initially launched at margin of 10bps over the ECB’s marginal lending rate, though over time the pricing was reduced and tied instead to the deposit rate. As with the FLS and TFS, higher interest rates for banks that are contracting lending provide an incentive to lend. As with the UK, the TLTRO provided an innovative way to reduce the effective lower bound. With the link to the ECB’s deposit rate the TLTRO provided a way for the ECB to take wholesale interest rates significantly below zero without counterproductive compression to margins in the banking sector (Chart 9).
4  BIS Review 84/2005  I believe that we need to combine these four vertical and horizontal aspects – together with enhanced supervisory transparency at all levels – in order to have the most effective and efficient system. Conclusion In concluding my intervention today, I would be the first to admit that the ideas I have mentioned today are not revolutionary, but I believe that an evolutionary and balanced approach is the best way forward and provides the greatest chances of success. The flip-side of the coin in this evolutionary approach is that the responsibility to deliver is greater. But if we do not succeed in meeting our objectives, we should not be afraid to explore other, more radical solutions. The costs of non integration is too high. I would also like to re-emphasise that we have the possibility to make rapid and real progress in promoting an effective and efficient framework for European banking supervision. This should not only help us to achieve our goals within the EU, but could also promote greater convergence beyond the EU. Allow me to put my Basel hat on for a couple of final comments on related challenges of the Basel Committee. At a more global level, we face the same consistency issue in the implementation of Basel II, and as I said, in this case, Europe can lead this process, we in Europe have more instruments to do it, and the example can be very helpful for the Basel process.