Liquidity conditions and monetary policy operations from 30 July to 4 November 2025

Prepared by Kristian Tötterman and Samuel Bieber

Published as part of the ECB Economic Bulletin, Issue 8/2025.

This box describes the Eurosystem liquidity conditions and monetary policy operations in the fifth and sixth reserve maintenance periods of 2025. Together, these two maintenance periods ran from 30 July to 4 November 2025 (the “review period”).

Excess liquidity in the euro area banking system continued to decline gradually. Liquidity provision decreased over the review period, owing primarily to lower Eurosystem holdings under the asset purchase programme (APP) and pandemic emergency purchasing programme (PEPP) following the discontinuation of APP reinvestments at the beginning of July 2023 and PEPP reinvestments at the end of December 2024. This decrease was partly offset by the continuing reduction in liquidity absorption through net autonomous factors.

Liquidity analysis of autonomous factors

Starting with this issue of the Economic Bulletin, there is a slight change to how Eurosystem balance sheet items are categorised in this box. This is to enhance understanding of the factors that drive changes in autonomous factors and their liquidity implications. For the analysis of Eurosystem liquidity conditions, autonomous factors are categorised as follows: (i) net assets denominated in euro, (ii) net foreign assets, (iii) government deposits, (iv) banknotes, and (v) other autonomous factors (net). The first two factors are liquidity-providing in net terms, while the remaining three factors are liquidity-absorbing in net terms. The allocation of balance sheet items to these groups has now changed slightly. First, the revaluation accounts of non-euro holdings, which were previously categorised as other autonomous factors (net), have been integrated into the net foreign assets category, making the typically minimal liquidity impact of changes in that category more transparent. Second, net assets denominated in euro now encompass all major euro-denominated, non-monetary policy-related deposit-taking and investment activities. Previously, only some of these activities were assigned to this category, while the remaining items were allocated to other autonomous factors (net). Third, the residual other autonomous factors (net) category now includes significantly fewer balance sheet items, such as the Eurosystem’s capital, reserves and provisions. The historical time series, which reflect this revised breakdown, are available on the ECB Data Portal under the Liquidity table publication.

Liquidity needs

The average daily liquidity needs of the banking system, defined as the sum of net autonomous factors and reserve requirements, decreased by €30 billion to €1,288 billion over the review period (Chart A). This decline was driven by an increase in liquidity-providing autonomous factors and a slight reduction in liquidity-absorbing autonomous factors. Minimum reserve requirements remained stable at €168 billion, with no effect on overall liquidity needs (Table A).

Chart A

Changes in aggregate liquidity needs

(EUR trillions)

Liquidity-providing autonomous factors rose by €28 billion over the review period, mainly reflecting an increase of €25 billion in net assets denominated in euro. This overall increase was primarily attributable to the continued decline in euro-denominated non-monetary policy deposits. Euro-denominated non-monetary policy investments went up slightly, which also contributed to the increase in net assets denominated in euro. Meanwhile, net foreign asset holdings rose marginally by €3 billion, with only a minimal impact on overall liquidity conditions.

Liquidity-absorbing autonomous factors decreased by €3 billion over the review period, owing primarily to a decline in other autonomous factors. On average, net other autonomous factors fell by €18 billion, which mainly reflected a reduction on the liability side. Government deposits increased slightly by €6 billion to €110 billion, driven by higher government issuance in the autumn and, consequently, larger cash buffers held by national treasuries. The average value of banknotes in circulation increased slightly by €8 billion over the review period, reaching €1,591 billion.

Liquidity provided through monetary policy instruments

The average amount of liquidity provided through monetary policy instruments decreased by €127 billion to €3,901 billion over the review period (Chart B). The decline in the liquidity supply was largely driven by a reduction in Eurosystem outright portfolios.

Chart B

Changes in daily liquidity provided through open market operations and excess liquidity

(EUR trillions)

The average amount of liquidity provided through outright monetary policy portfolio holdings went down by €125 billion to €3,881 billion over the review period. This decline was due to maturing APP and PEPP holdings not being reinvested.

The average amount of liquidity provided through credit operations fell by €3 billion to €21 billion over the review period. The average outstanding amount of main refinancing operations (MROs) and three-month longer-term refinancing operations (LTROs) decreased by around €1 billion and €2 billion respectively. Banks’ muted participation in these regular operations reflects their comfortable liquidity position and the availability of alternative funding sources at attractive market rates and maturities.

Excess liquidity

Excess liquidity decreased by €97 billion to €2,614 billion over the review period (Chart B). Excess liquidity is the sum of bank reserves held in excess of minimum reserve requirements and banks’ recourse to the deposit facility net of their recourse to the marginal lending facility. It reflects the difference between the total liquidity provided to the banking system via monetary policy instruments and the liquidity needed by banks to cover their minimum reserves. Having peaked at €4,748 billion in November 2022, excess liquidity has since declined steadily.

Interest rate developments

During the review period, the Governing Council kept the three key ECB interest rates unchanged – including the deposit facility rate, through which it steers the monetary policy stance. The rates on the deposit facility, MROs and marginal lending facility remained at 2.00%, 2.15% and 2.40% respectively (Table B).

The average euro short-term rate (€STR) marginally increased over the review period, while maintaining a negative spread relative to the deposit facility rate. On average, the €STR was 7.5 basis points below the deposit facility rate over the review period, with this spread narrowing slightly from 7.9 basis points during the third and fourth maintenance periods of 2025.

The average euro area repo rate, as measured by the RepoFunds Rate Euro index, remained closer to the deposit facility rate than to the €STR. On average, the repo rate was equal to the deposit facility rate over the review period, which was also the case in the third and fourth maintenance periods of 2025.