private sector. as the euro area financial system is mainly bank - based, our future actions must continue to support bank lending to businesses and households as the recovery evolves. i am therefore in favour of keeping this funding instrument as a liquidity backstop in some form in the future, also to avoid possible cliff effects related to future repayments. however, i think that a careful recalibration of its pricing is required. now that the recovery is well underway, the generous pricing of tltro - lending rates can be up to 50 basis points below the average deposit facility rate since april 2020 - is no longer justified. the present calibration of tltro pricing clearly provides riskless arbitrage opportunities for banks. having said that, i am fully aware of the possibility that the negative interest rates on excess liquidity holdings may affect the profitability of bank intermediation in the long run ( since they are primarily funded by their clients ’ deposits ). i hence strongly advocated the introduction of the two - tier system in 2019, which aims to exempt part of credit institutions'excess liquidity holdings from the cost of the negative deposit facility rate. this has been a success in limiting the negative side effects on bank intermediation of low - for - long interest rates, thereby preserving the transmission of monetary policy. the exemption volume is determined as a multiple of banks'minimum reserve requirements, which is currently set at six. when the two - tier system was introduced, in october 2019, total excess liquidity was just above €1. 7 trillion. as a result of the ecb response to the covid pandemic, this has now jumped to €4. 4 trillion, an amount well above the level of reserves necessary to steer market rates towards the deposit facility rate. this frel - floor required excess liquidity - is currently estimated at about €1 trillion. consequently, i would support a more rule - based approach to set the level of the multiplier, as a function of the change in excess liquidity net of both necessary ( frel ) and borrowed reserves ( tltros ). much more than subsidising liquidity provision beyond exceptional circumstances, a well calibrated tiering system belongs to the normal tools of monetary policy as shown by other jurisdictions. let me conclude. we sometimes read that central banks, including the ecb, are presently squeezed by two dilemmas : the first one on their objectives, as central banks would have either

olli rehn : remarks - bank of finland institute for emerging economies ’ ( bofit ) 30th anniversary dinner opening remarks by mr olli rehn, governor of the bank of finland, at bank of finland institute for emerging economies ’ ( bofit ) 30th anniversary dinner, helsinki, 9 november 2021. * * * ladies and gentlemen, your excellencies, dear friends and partners of bofit, may i wish you a very warm welcome to this anniversary dinner and to the bank of finland. i am delighted that you have been able to join us this evening to celebrate bofit ’ s 30th anniversary with us. we highly appreciate our partnership with you, in academia, the media and administration, a partnership that goes back many years. while bofit is a dynamic, no doubt cool and chillzoomer at 30, its home base – the bank of finland – is already a grown - up boomer at 210 years of age. in the global history of central banking, the bank of finland is certainly no novice. founded in 1811, the bank of finland is the fourth oldest central bank in the world today. only the swedish, british and french central banks are older than us. however, we could even make a claim to share sweden ’ s top position – its central bank, riksbanken, was founded in 1668 when finland was still firmly part of the kingdom of sweden! in fact, our best - known economist before the 2016 nobelist bengt holmstrom, was anders chydenius, who played a very active role in the economic policy debates of 18th century stockholm. he was so active in monetary policy that he was effectively sacked from the riksdagen, the swedish parliament, since he was calling for an end to the hard currency approach that was ruining the nation ’ s industries. no wonder he gained a reputation as a champion of free speech and freedom of expression! anyway, following its foundation the bank of finland played a catalyst role in the nation - building process in finland. autonomous institutions in economic and monetary policy - making were established in parallel with the evolution of an increasingly politically aware civil society and newspapers. these were followed by political and constitutional independence. and some decades later on friday 1 december 1939, the government of the winter war was essentially constructed on these very premises, on the second day of the war when helsinki was bombed by soviet planes. the decision was shaped in a meeting of vaino tanner, the great ” old mensh