The European Central Bank (ECB) has announced plans to gradually reduce the amount of free cash it provides to banks, signaling a shift in its monetary policy approach. The decision comes as the ECB aims to strike a balance between supporting the economy and preventing excessive risk-taking by financial institutions.
Under the new policy, the ECB will start weaning banks off free cash at a gentle pace, avoiding any sudden shocks to the financial system. This move is seen as a cautious step towards normalizing monetary conditions after years of ultra-loose policies aimed at stimulating economic growth.
