The European Central Bank is unlikely to shrink its balance sheet back to a size seen in the first decade of its existence, ECB chief economist Philip Lane said on Thursday, just as the bank is discussing the new operational framework.

"The appropriate level of central bank reserves can be expected to remain much higher and be more volatile in this new steady state compared to the relatively-low levels that prevailed before the global financial crisis," Lane told a conference.

"The appropriate level of central bank reserves in the 'new normal' steady state should avoid the risks associated with excessively-scarce or excessively-abundant reserves," he added. (Reporting by Balazs Koranyi; Editing by Toby Chopra)