). in the fo urth tltro iii operatio n in june 2020 the participating banks received a to tal o f €1. 31 billion, an all - time reco rd in euro system refinancing operations, which will mature in june 2023, altho ugh it can be repaid earlier. the expected average cost of tltro iii funds. such early voluntary repayments of tltro iii funds would reduce the eurosystem balance sheet. in my view, it may be appropriate to wait until sufficient outstanding tltro iii balances have been repaid before starting the bond portfolio run - off, for two reasons. first, the large tltro repayments expected in the first part of 2023 will give us an initial picture of any potential asymmetry and non - linearities in the effects of balance sheet reduction vis - a - vis those generated by balance sheet expansion, by when we will probably have too a clearer idea about whether we are in, or headed towards, a recession. second, it seems reasonable to wait and observe potential ripple effects of tltro iii repayments in bond markets before starting the bond portfolio run - off, as it will allow us to assess the effective impact of balance sheet reduction on financial conditions. after first allowing markets to absorb significant tltro iii repayments, the normalisation of the ecb ’ s balance sheet could be followed by ending full reinvestment of the app portfolio. as announced by president lagarde last month, we will decide on the key principles of the reduction of our app portfolio at our december monetary policy meeting. and why we should end app reinvestments before pepp reinvestments? in my opinion, a “ first - in - first - out ” staggered approach is preferable for at least two reasons. first, pepp reinvestments remain an important line of defence against ( pandemic - related ) fragmentation episodes, so they are potentially pledged for reallocation across jurisdictions while the lasting vulnerabilities caused by the pandemic continue to pose a risk to the smooth transmission of our monetary policy. second, we previously declared that pepp reinvestments will not end up until at least the end of 2024, while our forward guidance on app reinvestments was open - ended. we have clearly stated our intention to continue app reinvestments for an extended period of time past the date when

of a ceiling on public spending and the introduction of greater coordination in countries ’ budgetary processes. in the corrective arm, greater significance is accorded to the debt criterion and the sanctions system has been reinforced. members are obliged to reform national fiscal frameworks and set up independent fiscal authorities, which must conduct public assessments regarding the implementation of national budgetary rules. overall, the reform echoes the latest economic literature, which stresses that it is the design and not only the mere existence of fiscal rules that has a bearing on their effectiveness. however, the new framework of governance is now more complex and the room for discretionality in its application remains ample. its effectiveness will thus depend on such application being strict. full article available in spanish : https : / / www. funcas. es / publicaciones / sumario. aspx? idref = 1 - 01141 for more information on the reform of the economic governance in the economic and monetary union see caballero, garcia perea, gordo ( 2011 ) available in spanish : https : / / www. bde. es / f / webbde / ses / secciones / publicaciones / informesboletinesrevistas / boletineconomico / 11 / ene / fic h / art5. pdf 6 / 9 coupled with and complemented by an appropriate balance in overall economic policymaking. actually, beyond accession criteria, this notion was also enshrined on an ongoing basis through the stability and growth pact and, later on, with the macroeconomic imbalance procedure. this latter check on structural and broad macroeconomic policies was the response to the hard - learnt lesson ( especially in countries like spain ) that a lack of competitiveness and excessive credit cycles could seriously hamper the optimal conduct of monetary and financial policies and usher in financial fragmentation. also, strictly in the realm of monetary policy, fulfilling our price stability mandate has become more challenging in recent times. natural interest rates in the main advanced economies have been gradually falling over the last three decades and they currently stand at historically very low and possibly negative levels. there are also good reasons to think that natural rates may be stuck at very low levels for long periods. this, in conjunction with a lower bound for policy rates, seriously curtails the space for conventional monetary policy. unconventional measures, such as asset purchases, negative interest rates and forward guidance, have helped us to partially overcome the lower bound constraint, thus