Within its own remit, each NCB carries out the regular tenders orchestrated by the ECB and grants refinancing within the framework of these periodic auctions of central bank money. The NCBs manage the settlement accounts of credit institutions, hold the standing facilities for overnight credit and deposits, and also monitor minimum reserves. They are in constant contact with the ECB and supply it with all the daily data essential to the conduct of effective monetary policy. •  A rapid integration of the national money markets  It was crucial to enable liquidity to circulate smoothly from one financial centre to another in the euro area so that operators could conduct the necessary arbitrage between the different centres, thus ensuring a single euro interest rate for each maturity. The TARGET system is the key component of this unification. Right from the start of 1999, it enabled credit institutions to effect large-value, crossborder transactions with same-day value all day long, thus allowing the interbank market to function as a single market right away.
Orphanides, Athanasios, and John C. Williams, “Inflation Targeting under Imperfect Knowledge,” in Frederic Mishkin and Klaus Schmidt-Hebbel (ed.) Monetary Policy under Inflation Targeting, Central Bank of Chile, 2007. Reprinted in FRBSF Economic Review, 2007. Reis, Ricardo, “Losing the Inflation Anchor,” Brookings Papers on Economics Activity, Fall 2021, 2022, 307-361. Swanson, Eric T., and John C. Williams, “Measuring the Effect of the Zero Lower Bound on Medium- and Longer-Term Interest Rates,” American Economic Review, 104 (10), October 2014, 3154-3185. 1 Board of Governors of the Federal Reserve System (2012). 2 Board of Governors of the Federal Reserve System (2020). 3 See Orphanides and Williams (2004, 2005, and 2007). There is a large theoretical and empirical literature on the formation of expectations. See, for example, Evans and  Honkapohja (2001), Malmendier and Nagel (2016), Coiboin et al (2022), and references therein. 4 As discussed in Levin and Taylor (2013), data on longer-run inflation expectations were spotty in past periods of high inflation. This situation has improved markedly over  the past 20 years, first with the appearance of inflation-indexed Treasury securities, and more recently with the introduction of the Survey of Consumer Expectations in 2013, and other surveys of businesses and market participants. 5 This is constructed by inferring the expectations 6-10 years from matched individual responses for “the next ten years” and “the next five years,” then taking the median  from the sample.