The European Central Bank is unlikely to shrink its balance sheet back to a size seen in the first decade of its existence, ECB chief economist Philip Lane said today.
Professor Lane's comments come as the bank is discussing a new operational framework.
"The appropriate level of central bank reserves can be expected to remain much higher and be more volatile in this new steady state compared to the relatively-low levels that prevailed before the global financial crisis," Philip Lane told a conference in Frankfurt.
"The appropriate level of central bank reserves in the 'new normal' steady state should avoid the risks associated with excessively-scarce or excessively-abundant reserves," he added.
