ECB Encourages Banks to Test Lending Offers as Reserves Shrink

Banks should prepare to tap regular loan offers by the European Central Bank as quantitative tightening proceeds and liquidity sloshing around the financial system shrinks, according to a blog post published Thursday.

The post cites an annual survey of bank treasurers showing lenders representing a quarter of euro-area banking assets operate close to their preferred level of reserves — as opposed to enjoying an abundance — up from 15% a year earlier. That share is set to climb to 50% by year-end.