Finland’s Välimäki on the ECB’s monetary policy framework review
Bank of Finland board member Tuomas Välimäki discusses the benefits of a ‘hybrid’ balance sheet model to provide dependable structural liquidity without distorting markets
Can you explain your preference for the hybrid balance sheet model as opposed to a pure floor or corridor system?
I think a hybrid framework best balances the trade-off between precise rate control and market neutrality. The ECB has an evolving approach that combines liquidity provision via both asset holdings and credit operations. It provides resilience and flexibility against changing financial and economic landscapes. This ‘hybrid’, or dual-instrument strategy supports market-based price
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