ecb ’ s governing council has taken further decisive monetary policy measures to support the economy during its gradual reopening and to safeguard medium - term price stability. we recalibrated the pandemic emergency purchase programme ( pepp ), increasing its size by €600 billion in june to a total of €1. 35 trillion, and extending its duration until at least the end of june 2021 and, in any case, until the governing council judges that the coronavirus crisis phase is over. moreover, we decided to reinvest the principal payments from maturing securities purchased under the pepp until at least the end of 2022. the pepp purchases aim to ensure the smooth transmission of our monetary policy across all sectors and euro area jurisdictions and to ease the overall monetary policy stance, helping to offset the downward impact of the pandemic on the projected path of inflation. in addition, we further eased the terms and conditions for accessing central bank liquidity under 1 / 3 bis central bankers'speeches our third targeted longer - term refinancing operations programme ( tltro iii ) to strengthen the incentives for banks to continue lending to the real economy. this was accompanied by an easing of collateral requirements to ensure that banks can make full use of these operations. for a year, banks will be able to borrow at negative rates, which can be as low as – 1 %, on the condition that they lend to the economy. largely in response to this recalibration, we have seen a very high take - up in our operations by banks, which has translated to a continued flow of credit to households and firms and kept lending rates at historic low levels. moreover, we decided to conduct a new series of seven pandemic emergency longer - term refinancing operations ( peltros ) to provide liquidity support to the euro area financial system and help to preserve the smooth functioning of money markets by providing an effective backstop following the expiry of the bridge longer - term refinancing operations ( ltros ) conducted since march 2020. overall, the monetary policy measures we have taken since early march are providing crucial support to the economy, supporting access to financing, including for those most affected by the spread of the pandemic, and contributing to maintaining favourable financing conditions for all sectors and jurisdictions. in the current environment of elevated uncertainty, the governing council will carefully assess all incoming information, including developments in the exchange rate, with regard to its implications

for the medium - term inflation outlook. we continue to stand ready to adjust all of our instruments, as appropriate, to ensure that inflation moves towards our inflation aim in a sustained manner, in line with our commitment to symmetry. moreover, the ecb ’ s strategy review, which was delayed because of the pandemic, has resumed recently and will be an important focus for our work over the next year. euro area banking sector developments and financial stability issues the euro area financial sector has shown resilience so far, due to the measures taken following the financial crisis and the fiscal, prudential and monetary policy response that played a key role in maintaining credit supply and preventing a large increase in corporate and household defaults. however, financial stability risks in the euro area remain elevated, as vulnerabilities in the nonfinancial sector have increased owing to weak earnings and rising indebtedness. euro area bank profitability has continued to decline, and is expected to remain very weak, with credit losses set to increase. this is reflected in the low market valuations of euro area banks and has added to structural challenges, such as overcapacity and limited revenue diversification. nevertheless, euro area banks currently have sufficiently robust capital and liquidity buffers to absorb losses and support lending to the real economy. the ecb and the national micro - and macroprudential authorities deployed extraordinary measures to limit the consequences of the pandemic, acting in a countercyclical manner. the ecb encouraged banks to use their capital and liquidity buffers for lending purposes and loss absorption. we also continue to closely monitor risks in the non - bank financial sector. during the market turmoil in march, some investment funds and money market funds experienced significant liquidity stress, which exposed pre - existing vulnerabilities. liquidity strains in the non - bank financial sector amplified the market sell - off and threatened to spill over to the broader financial system and, potentially, to the real economy. monetary policy actions taken by the ecb and other central banks around the world in the pursuit of their respective mandates helped improve market conditions during this period. but this episode highlighted that the resilience of the non - bank financial sector needs to be strengthened through regulatory reforms, which should also reflect macroprudential perspectives. this is especially important given the growing role of non - bank financial institutions in financing the real economy and their interlinkages with the rest of the financial system. europe ’