Isabel Schnabel: Towards a new Eurosystem balance sheet

Speech by Ms Isabel Schnabel, Member of the Executive Board of the European Central Bank, at the European Central Bank conference on Money Markets 2025, Frankfurt am Main, 6 November 2025.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Key messages:

• Quantitative normalisation is proceeding smoothly, with strong liquidity positions of banks and abundant excess liquidity
• Fixed-rate full allotment in standard refinancing operations ensures that liquidity is always available when banks need it
• Operational framework suggests a sequence for how to supply reserves in the future, with a persistent take-up of standard refinancing operations to precede the launch of structural operations, starting with longer-term refinancing operations and followed by a structural securities portfolio
• Considerations about stance neutrality, policy space and financial soundness suggest tilting the new structural securities portfolio towards shorter-term securities

The Eurosystem balance sheet is a mirror of the shocks that have hit the euro area economy over the years. It tells a story of crisis and recovery, of inflation and disinflation.

After reaching a peak in 2022, the size of our balance sheet has now been declining for three years. Over this period, our holdings of monetary policy-related assets have fallen by 45%, steadily reducing our financial market footprint.

The views expressed in this speech are those of the speaker and do not necessarily reflect those of the BIS.