On Thursday 14 March, Isabel Schnabel, member of the Executive Board of the European Central Bank (ECB), provided further details on the rationale behind the revision of the Eurosystem’s operational framework (see EUROPE B13370A33).
In particular, Ms Schnabel felt that a “flexible” floor, where “orderly” deviations in both directions from the deposit facility rate (DFR) are tolerated, with a narrow corridor, would limit volatility and encourage market activity. However, excessive...