paper. [ 22 ] for an analysis of scarcity effects and the role of securities lending, see, e. g., arrata et al. ( 2020 ), op. cit. [ 23 ] in november 2020, the eurosystem lowered its minimum securities lending fee from 10 to 5 bps for securities collateral and from dfr - 30bps to dfr - 20 bps for cash collateral transactions. [ 24 ] private and public securities lending can act as substitutes. for example, aggarwal, bai and laeven ( 2018 ) find that the possibility to borrow german sovereign bonds from the eurosystem reduced the demand to borrow these bonds in the private repo and securities lending market ; see aggarwal, r., bai, j. and laeven, l. ( 2018 ), “ the role of government bond lending market in collateral transformation, ” working paper. [ 25 ] jank, s., monch, e., and m. schneider ( 2019 ) “ safe asset shortage and collateral re - use ”, working paper. [ 26 ] in principle, higher asset encumbrance due to the tltros may lead to greater collateral scarcity. however, this effect is expected to be negligible : as non - marketable securities are also eligible as collateral in the eurosystem ’ s refinancing operations, the overlap with collateral used in market transactions is likely limited. indeed, banks ’ additional mobilisation of government bonds as eurosystem collateral currently appears to be relatively small when compared to other asset classes, especially non - marketable additional credit claims. [ 27 ] quarter - end effects have diminished in recent years, owing in part to improvements in euro area banks ’ leverage ratios. for a discussion of the effects of regulation on money market volumes, rates and dispersion, including the analysis of quarter - end effects, see corradin et al ( 2020 ), op. cit. [ 28 ] correa, r., du, w. and liao, g. ( 2020 ), “ u. s. banks and global liquidity, ” working paper. [ 29 ] by effectively lowering the cost of holding central bank reserves, the temporary exclusion of central bank reserve holdings from the leverage ratio contributes on the regulatory front to the mitigation of the impact of negative rates on bank profitability, complementing the effect of the two - tier system and the more

the sovereign debt crisis in the euro area, banks once again increased their demand for central bank liquidity. the provision of central bank liquidity also stimulated the supply of liquidity in the private market, especially to banks located in the periphery. [ 16 ] the optimal design of central bank liquidity policies is an important research question, which is examined in the conference paper by robatto ( 2020 ). the experience from these two crisis episodes shows that central bank liquidity provision can stimulate market functioning and lower money market rate dispersion. [ 18 ] during the pandemic, this was also clearly visible, as exemplified by the impact of our measures on term money market and commercial paper rates. after 2015, excess liquidity was primarily driven by the eurosystem ’ s large - scale asset purchases. although excess liquidity reached new highs with the implementation of asset purchases and financial stress remained at relatively low levels, the dispersion index rose substantially in 2015 and 2016. one factor that could cause such a rise is an uneven distribution of excess liquidity across countries or across banks and non - banks, similar to what had happened in us money markets in september 2019. however, in recent years, the divergence across overnight money market rates was primarily driven by repo rates secured by high - quality collateral. research suggests that this increase in the dispersion index can be linked to scarcity effects, as asset purchases and the increased regulatory demand for safe government bonds withdrew collateral assets from the financial system. to alleviate these scarcity effects, the eurosystem introduced the securities lending programme in april 2015. however, the programme was initially only sparsely used. only when the ecb introduced the cashcollateral option in december 2016, securities lending increased and contributed to lowering the dispersion of money market rates, thus supporting monetary policy transmission ( slide 7 ). [ 22 ] just recently, the eurosystem adjusted the pricing of the securities lending programme as of november 2020, [ 23 ] to reflect changes in euro area repo market conditions since december 2016 and to ensure that the eurosystem securities lending facilities remain an effective backstop. this pricing adjustment has resulted in a pronounced increase in the ecb ’ s securities lending activity as measured by the outstanding balance of securities on loan. counterparty feedback received to date suggests that the new pricing does not constitute a material change in policy but might help to alleviate some pressure in the repo market ahead of the year - end. there are two