April 2023: Back to normal? Balance sheet size and interest rate control
By Isabel Schnabel The ECB’s unconventional monetary policy measures have significantly expanded its balance sheet over the past eight years, including a significant growth of excess reserves on the liabilities side. In recent years, these excess reserves have been instrumental in steering short-term interest rates. Having started quantitative tightening (QT) on 1 March 2023, which[…]