ECB'S CIPOLLONE: WE SHOULD ENSURE THAT OUR RATE DECISIONS ADEQUATELY COMPENSATE FOR THE TIGHTENING INDUCED BY THE REDUCTION OF OUR BALANCE SHEET.

Since the onset of the financial crisis in 2007, there has been a dramatic expansion in the size of the balance sheets of the Bank of England (BOE), the European Central Bank (ECB), and the U.S.

In the background remains a structural tightening trend as the ECB shrinks its balance sheet and drains reserves. So far liquidity conditions are still ample and the impact has been mainly felt in ...