increased significantly, tensions immediately spread from the united states to the euro area and the money market more or less stopped functioning. at that point, the eurosystem intensified its actions with a view to allowing solvent banks to carry out their activities. as a result, a number of unprecedented additional steps were taken. • thus, in mid - october the ecb took the quite exceptional step of adopting a fixed rate tender procedure with full allotment for all of its weekly main refinancing operations and its longer - term refinancing operations with maturities of up to six months. this will remain in place for as long as is necessary given the situation in the markets. • it also increased the number and frequency of longer - term refinancing operations, conducting three additional refinancing operations per month – two with a maturity of three months and one with a maturity of six months – and introducing a special - term refinancing operation with a maturity corresponding to the duration of the reserve maintenance period. • in parallel, the ecb implemented a new series of exceptional measures seeking to temporarily extend the list of assets eligible for use as collateral in eurosystem credit operations. • finally, the ecb increased the us dollar financing provided to its counterparties by conducting fixed rate tender procedures with full allotment and maturities ranging from one week to three months through swap agreements concluded with the us federal reserve system. these measures, which reflect the very significant strengthening of the eurosystem ’ s intermediation role during this period of turbulence, have allowed solvent banks continued access to liquidity despite the dysfunctional nature of the money market. they have also helped to alleviate the tensions observed in certain sectors of the money market. for example, the spread between unsecured longer - term euribor rates and the rates on overnight index swaps has declined considerably – although it remains elevated, significantly higher than the levels observed prior to september 2008. in practice, these measures allow euro area banks to obtain as much euro liquidity as they wish, whether through our weekly operations or our longer - term refinancing operations, using a wide range of assets as collateral. in total, the eurosystem ’ s balance sheet rose by about eur 600 billion since end - june 2007 and today, an increase of about 65 % ; with the assets reflecting the strong increase in the volume of liquidity provided and the liabilities reflecting banks ’ concomitant recourse to

dovish. that would represent a return to the first extreme incentivising borrowing. both these extremes have perverse effects. the impacts of the extreme policies and the parallel trends in the economy are assessed by duffie ( 2023 ) for the us financial market and, for example, by grimm, laeven and popov ( 2023 ) for the euro area. the impacts on global trade are summarised by alfaro and chor ( 2023 ). it would be inappropriate for me to evaluate the polices of other central banks, but it would be a mistake not to critique the past policy of the cnb. the main problem in the czech republic was the rapid switch from one extreme to the other – from ultra - low rates and efforts to trigger inflation to ultra - high rates and efforts to rein inflation back in again. everything comes at a cost. a rapid increase in rates doesn't always mean lower inflation in the future. you can't put right the mistakes made in past years in one fell swoop. this is discussed in the classical literature – see, for example, friedman and lucas ( 1976 ). the big lesson for me is that we will try not to repeat 2017 at the cnb. the interventions made at that time to weaken the koruna and raise inflation led within four months to an increase in the cnb's balance sheet, or rather in the banking sector's liquidity. it increased from czk 1, 300 billion in december 2016 to czk 2, 300 billion in 2 / 4 bis - central bankers'speeches april 2017. this contributed to us later having the highest core inflation in the eu. each central bank should start with itself, with self - reflection. my discussions with colleagues from the fed, the ecb, the bank of england and the reserve bank of new zealand confirmed me in the view that our models, should, like theirs, be audited and critically assessed. professor at the university of chicago and former governor of the reserve bank of india raghuram rajan ( rajan, 2023 ) said : " central banks have constrained their own policy space with asymmetric and unconventional policies, ostensibly intended to deal with the policy rate touching the lower bound. they have triggered a variety of imbalances that are making fighting inflation harder today. " more purposeful and less interventionist central banks would probably do better than a high - inflation, high - debt, low - growth world