Banks in the euro zone are expected to increasingly rely on the European Central Bank (ECB) for funding as the central bank's bond holdings diminish.
Schnabel, an ECB Executive Board member, indicated during a speech in Frankfurt that the evolving landscape for lenders in the euro area suggests a potential rise in demand for ECB refinancing operations.
As policymakers work to reduce bond inventories, the implications for liquidity and funding strategies among financial institutions are becoming more pronounced.