ECB Must Choose ‘Middle Path’ on Future Reserve Level, Lane Says

The European Central Bank must be careful not to withdraw too much liquidity from the financial system as it unwinds past stimulus measures, Chief Economist Philip Lane said.

While a further reduction of reserves is appropriate, a “middle path” should be chosen to strike the right balance between costs and benefits and “safeguard the stability of the banking and financial systems,” Lane said Thursday in a speech.