to maintain price stability in the medium term, and liquidity decisions taken in the course of implementing this stance. this distinction serves to isolate signals of the monetary policy stance from the impact on very short - term interest rates of the noise introduced by liquidity movements. at times of market stress, underlining this distinction is even more important than in “ normal times ”. in circumstances of market stress, liquidity management may need to be more active in order to contribute to the smooth functioning of the money market and to ensure that very short - term money market rates remain close to the minimum bid rate of the eurosystem ’ s main refinancing operations. throughout the period of financial market turmoil, and since the very first hours of the start of the money market turbulences, the ecb has promptly communicated to the market its liquidity policy intentions and explained its actions. it was evident from the start that credit institutions requirement to fulfil their reserve requirement on average throughout the maintenance period, the so - called averaging provision, was now used with a preference to do so early within the period. liquidity on different days of a reserve maintenance period was no longer substitutable, and short - term interest rates tended rather to behave as if each individual bank perceived its distribution of liquidity shocks as strongly biased to the tight side, even if this was of course not the case at an aggregate level. the first response of the eurosystem during the turmoil was to try to keep very short - term money market rates near policy rates through more active liquidity management. with this objective in mind, the ecb adjusted the distribution of liquidity supply over the course of a maintenance period, by increasing the supply at the beginning of the period and reducing it later in the period ( the so - called frontloading ). the average supply of liquidity remained unchanged over the whole reserve maintenance period, in line with the eurosystem ’ s aim to provide to the banking system over each maintenance period the exact amount of total liquidity it needs to fulfil its liquidity deficit. the average size of the eurosystem ’ s refinancing operations for the maintenance periods since august 2007 remained at around €450 billion, as in the first semester of 2007. second, since the 9th of august 2007, the eurosystem has made more frequent use of finetuning operations than in “ normal times ”, both in order to inject further liquidity early in the maintenance period

in addition, when necessary, to that provided in the main refinancing operations but also to absorb excess liquidity, in order to steer the eonia close to the minimum bid rate. as a third measure, the eurosystem increased the share of refinancing provided via longerterm refinancing operations ( ltros ), initially with a three - month maturity and, since april 2008, also with a six – month maturity, and reduced the share provided via the one - week main refinancing operations ( mros ). accordingly, the total amount of outstanding refinancing remained unchanged, while the average maturity was extended. as a result of this liquidity policy, the eurosystem maintained control over short - term money market rates, supported banks ’ access to liquidity and the general functioning of the euro money market, without the need for making any structural change to its operational framework for monetary policy implementation. some central banks conducted additional actions, which mainly included expanding the range of eligible collateral and of counterparties. the ecb, which had accepted relatively broad ranges of collateral since the start of the euro, did not need to adjust their collateral framework. indeed, owing to its acceptance of a broad range of collateral as well as the large number of eligible counterparties, the eurosystem ’ s collateral framework has been well equipped to support the implementation of monetary policy during the ongoing market turbulence. the share of deposited collateral not used to cover credit from monetary policy operations has remained high. this suggests that availability of collateral has not been a constraint on the euroystem ’ s counterparties in the wake of the turmoil. as the turmoil went on, central banks strengthened their cooperation, first through enhanced information exchange and collective monitoring of market developments and later on by coordinated steps to provide liquidity. in response to a situation where some euro area banks were reported to be concerned about the limited availability of funding denominated in us dollars, the ecb agreed with the us federal reserve to grant loans in dollars to euro area banks in connection with the federal reserve new term auction facility ( taf ) in us dollar. 1 the first two operations, for an amount of usd 10 billion each, settled on 20 and 27 december 2007 and were renewed on 17 and 31 january 2008. similar operations were also carried out by the swiss national bank. as continued pressure was observed in the money market, the ecb announced on 11 march 2008 its intention to resume carrying out us