Quantitative easing, safe asset scarcity and bank lending

Arbeitspapier

The Eurosystem's Public Sector Purchase Programme (PSPP) increased the scarcity of safe assets, which caused significant declines and substantial dispersion in European repo rates. However, banks holding these safe assets benefited from this development: First, using the German security register, this paper shows that scarcity affects bank funding costs, as their collateral supply is determined by their ex ante securities holdings and repo rates. Second, it makes use of the German credit register to show that asset scarcity had real effects: Banks more exposed to asset scarcity increased their credit supply.

Object Details

• ISBN: 978-3-95729-843-0
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Deutsche Bundesbank Discussion Paper ; No. 35/2021

Classification and Topics

• Classification: Wirtschaft ; Money Supply; Credit; Money Multipliers ; Central Banks and Their Policies ; Portfolio Choice; Investment Decisions ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: Quantitative easing ; safe asset scarcity ; repo rates ; bank lending ; monetary transmission

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Tischer, Johannes
• Event: Veröffentlichung
• (who): Deutsche Bundesbank
• (where): Frankfurt a. M.
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/245524
• Last update: 10.03.2025, 11:43 AM CET