The Eurosystem is primarily targeting market participants with market-making obligations and is monitoring the securities lending activities closely so as to ensure the ongoing effectiveness of the arrangements. In September 2017, securities on average worth € billion were lent out by the Eurosystem, of which around € billion were lent out against cash as collateral. For further 9 / 10  BIS central bankers' speeches  details please see the section Securities lending. 8 See Corradin, S. and A. Maddaloni (2017), “The importance of being special: repo markets during the crisis”,  ECB Working Paper No 2065. The authors study the case of ECB SMP purchases of Italian sovereign bonds in the second half of 2011. The SMP portfolio was strictly buy-to-hold and purchased securities were not lent out. 9 See D’Amico, S., R. Fan and Y. Kitsul (2014), “The scarcity value of Treasury collateral: Repo market effects of  security-specific supply and demand factors”, Finance and Economics Discussion Series Paper No 2014-60; and Jordan, B.D. and S.D. Jordan (1997), “Special Repo Rates: An Empirical Analysis ”, The Journal of Finance, Vol. 52(5), pp. 2051-2072. 10 See Cœuré, B. (2017), “Bond scarcity and the ECB’s asset purchase programme”, speech at the Club de  Gestion Financière d’Associés en Finance, Paris, 3 April. 11 One should note here the difference between the development of repo funds rate and the average specialness  premia after our decision to also accept cash as collateral in securities lending. While the former stabilised, the latter continued to increase.
Second, as can be seen on the next slide, increasing excess liquidity has led to a notable decline in the share of trades backed by general collateral (GC), which is traditionally used to obtain funding for cash management purposes. This may suggest that proceeds from the sales of securities, together with the ECB conducting its main refinancing operations at fixed rate full allotment, have increasingly acted as a substitute for funding in the interbank market. At the same time, we have observed an appreciable increase in collateral-driven or specific repos. You can see this on the right-hand side. In other words, repos are increasingly conducted as a means to move securities among market participants, not primarily to raise cash.6 There might be several reasons for this. Smaller inventories held by market-makers after the crisis, for example, may cause them to source bonds in the repo market more often. Alternatively, short-selling activity may have increased, a phenomenon often observed at, or close to, monetary policy turning points when investors expect yields to rise. One factor that is likely to have contributed to the rise in special repos is policy-induced scarcity, however. This can best be seen when considering the German Bund market. Here, our purchases have absorbed a multiple of net issuance in recent years, meaning that we have actively reduced the stock of outstanding bonds held by private market participants.