FRANKFURT (Reuters) - The European Central Bank wants to wean banks off free cash but it will try to do that at a gentle enough pace not to disrupt the financial system or credit creation, the results of its long-awaited framework review showed on Wednesday.

The following are the key points of the ECB's new framework for steering interest rates in a new era in which inflation is higher and excess liquidity pumped in over the last decade is slowly being drained from the system:

- The ECB will aim to keep overnight interbank interest rates "in the vicinity" of the rate it pays on bank deposits, currently 4%. It will however tolerate some volatility.

- Banks will continue to be able to borrow from the ECB at its weekly Main Refinancing Operations (MRO) and 90-day auctions.

- The MRO rate, currently 4.50%, will be lowered as of Sept. 18 to reduce the spread between it and the deposit rate to 15 basis points. This should help keep the Euro Short Term Rate (ESTR) close to the ECB's deposit rate while providing banks with some incentive to lend to each other.

- The ECB will launch new, long-term loans for banks and bond purchases "at a later stage" once it sees banks have started to borrow from it again as a result of liquidity becoming less abundant.

- The new bond portfolio is likely to be comprised of bonds with shorter maturities as it will only aim to cover banks' "structural liquidity needs arising from" demand for banknotes and minimum reserve requirements.

- The ECB's Asset Purchase Programme and Pandemic Emergency Purchase Programme will continue to run off.

- Minimum Reserve Requirements for banks will stay at 1%.

- The ECB will review its framework again in 2026 or earlier if needed. It will also carry out an in-depth analysis of the design of its new lending and bond-buying operations.

(Reporting By Francesco Canepa; Editing by Catherine Evans)