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.
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.