Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/37356
Authors: 
Hauck, Achim
Neyer, Ulrike
Year of Publication: 
2010
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Banking and Monetary Policy D12-V2
Abstract: 
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.
Subjects: 
Liquidity
Monetary Policy Instruments
Interbank Market
Financial Crisis
JEL: 
E52
E58
G21
Document Type: 
Conference Paper

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