Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311176 
Year of Publication: 
2025
Series/Report no.: 
ECB Working Paper No. 3010
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Exploiting the recalibration of ECB's outstanding central bank funding in 2022, we show that a sharp reabsorption of bank liquidity induces a tightening impact on credit supply, as intended when central banks reduce their balance sheets. The tightening originates from the sudden relative convenience for banks accustomed to large liquidity holdings to more rapidly adapt to the new environment. Moreover, we show that the associated reduction in credit supply has real economic effects.
Subjects: 
monetary policy
banking
credit supply
QT
liquidity
JEL: 
E51
E52
G21
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-6999-4
Document Type: 
Working Paper

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