. in the market, the supply of reserves declined, while demand spiked, especially from riskier banks. in response, the eurosystem moved from a system with competitive bidding for a limited supply of reserves in the main refinancing operations to a system with fixed rates and full allotment. when market funding was not available or too costly, banks with a deficit of reserves now borrowed additional amounts from the eurosystem. and banks with a surplus of reserves would place them in our deposit facility. this created sizeable amounts of excess liquidity. [ 11 ] and because of the excess liquidity, short - term interest rates declined well below the mro ( main refinancing operation ) rate. five years later, faced with a prolonged period of inflation below target, the eurosystem launched a first series of targeted longer - term refinancing operations ( tltros ( targeted longer - term refinancing operations ) ) in 2014. these offered banks long - term funding at attractive conditions. to give you an order of magnitude here : financing volumes rose from up to 425 billion euro provided via tltro ( targeted longer - term refinancing operations ) i to more than 2 trillion euro pro ‐ vided via tltro ( targeted longer - term refinancing operations ) iii – equal to about 15 % of euro area gdp ( gross domestic product ). alongside the tltros ( targeted longer - term refinancing operations ), the eurosystem also started to buy significantly more debt securities with the launch of the asset purchase programme ( app ( asset purchase programme ) ) in 2014. securities holdings for monetary policy pur ‐ poses rose from around 195 billion euro at the end of september 2014 to almost 5 trillion euro, equivalent to almost 40 % of euro area gdp ( gross domestic product ), in summer 2022. both measures added substantially to the excess liquidity and caused short - term inter ‐ est rates to decline towards the level of the deposit facility rate. over time, it was per ‐ ceived that the eurosystem had moved gradually from a corridor system to a de facto floor system. 3 the eurosystem ’ s new operational framework what was our main reason for starting to review our current framework? the eurosystem discontinued reinvestments under the app ( asset purchase programme ) in july 2023. by the second half of 2024, we intend to start running off the pandemic emergency

and present, oxford university press. 4. taylor, j. ( 1993 ), discretion versus policy rules in practice, carnegie - rochester conference series on public policy, elsevier, vol. 39 ( 1 ), pp. 195 - 214. 5. woodford, m. ( 2004 ), interest and prices : foundations of a theory of monetary policy, princeton university press. 6. see changes to the operational framework for implementing monetary policy ( europa. eu ) 7. see key ecb ( european central bank ) interest rates ( europa. eu ) for details. 8. see kahn, g. ( 2010 ), monetary policy under a corridor operating framework, economic review, federal reserve bank of kansas city, vol. 95 ( q iv ), pp. 5 - 34. 9. see baker, n. and s. rafter ( 2022 ), an international perspective on monetary policy implementation systems, reserve bank of australia, bulletin, june, for an interna ‐ tional perspective on the changes in monetary policy implementation after the global financial crisis. 10. see bech, m. and c. monnet ( 2017 ), a search - based model of the interbank money market and monetary policy implementation, journal of economic theory, vol. 164, pp. 32 - 67, for a theoretical model of the interbank market. 11. excess liquidity equals the sum of excess reserves and deposits in the deposit facility. excess reserves are deposits by credit institutions on settlement accounts with the central bank that exceed the minimum reserve requirements. 12. see afonso, g. et al. ( 2023 ), monetary policy implementation with an ample supply of reserves, federal reserve bank of new york staff reports, no 910, for a theoreti ‐ cal discussion. 13. see changes to the operational framework for implementing monetary policy ( europa. eu ) for details on these four other principles. 14. see bech, m. and t. keister ( 2017 ), liquidity regulation and the implementation of monetary policy, journal of monetary economics, vol. 92, pp. 64 - 77, for a theoreti ‐ cal discussion of the impact of the basel iii liquidity coverage ratio ( lcr ( liquidity coverage ratio ) ) on interbank interest rates in an otherwise - standard model of monetary policy implementation. 15. quantitative provisions for liquidity were introduced into european law for the first time by the capital requirements regulation ( crr ( capital requirements regulation ),