Editing European Central Bank (section)

==== Debates on the role of central bank reserves in monetary policy ====
In "Towards monetary policies that do not subsidise banks"<ref>{{Cite journal |last1=de Grauwe |first1=Paul |last2=Ji |first2=Yuemei |date=2023-06-13 |title=Towards monetary policies that do not subsidise banks |url=https://www.ceps.eu/ceps-publications/towards-monetary-policies-that-do-not-subsidise-banks/ |journal=CEPS }}</ref> published in July 2023 and co-authored with Yuemei Ji, [[Paul De Grauwe|Paul de Grauwe]] criticizes the prevailing role of central bank reserves in monetary policy.<ref>{{Cite web |last=de Grauwe |first=Paul |date=2023-09-04 |title=The role of central bank reserves in monetary policy: Bundesbank Invited Speakers Series |url=https://www.bundesbank.de/en/service/dates/the-role-of-central-bank-reserves-in-monetary-policy-913968 |access-date=2023-11-26 |website=Deutsche Bundesbank}}</ref> De Grauwe states that major central banks are currently operating in a regime of abundance of bank reserves. This abundance, he argues, is a consequence of massive government bond-buying programs and a fundamental change in the operating procedures of these central banks. Since late 2021, in response to rising interest rates aimed at combating inflation, central banks have adopted a procedure of increasing interest rates by raising the remuneration on bank reserves. This approach has resulted in substantial interest payments to commercial banks. Due to past Quantitative Easing, bank reserves are now massive, leading to huge transfers of profits. Paul de Grauwe highlights the magnitude of these interest payments, comparing them to significant public expenditures:  the interests received by [[commercial bank]]s to the yearly spending of the EU (€165 billion) to the interest payments of the ECB during the same period (€152 billion). De Grauwe argues that these transfers lack economic rationale.