The Euro Area Interbank Market and the Liquidity Management of the Eurosystem in the Financial Crisis

Konferenzbeitrag

This paper develops a theoretical model which explains several stylized facts observed in the euro area interbank market after the collapse of Lehman Brothers in 2008. The model shows that if transaction costs are high, banks with a liquidity deficit will prefer to borrow liquidity from the central bank rather than from surplus banks in the interbank market. This implies that the central bank assumes an intermediary function. From a policy perspective, we argue that possible measures of the Eurosystem to reactivate the interbank market may conflict, inter alia, with monetary policy aims.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Banking and Monetary Policy ; No. D12-V2

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy ; Central Banks and Their Policies ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: Liquidity ; Monetary Policy Instruments ; Interbank Market ; Financial Crisis

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hauck, Achim ; Neyer, Ulrike
• Event: Veröffentlichung
• (who): Verein für Socialpolitik
• (where): Frankfurt a. M.
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/37356
• Last update: 10.03.2025, 11:42 AM CET