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Title:The euro area interbank market and the liquidity management of the eurosystem in the financial crisis PDF Logo
Authors:Hauck, Achim
Neyer, Ulrike
Issue Date:2010
Series/Report no.:DICE discussion paper 09
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 costs of participating in the interbank market are high, the central bank assumes an intermediary function between liquidity surplus banks and liquidity deficit banks and thereby replaces the interbank market. 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
G01
G21
ISBN:978-3-86304-008-6
Document Type:Working Paper
Appears in Collections:DICE Discussion Paper, Düsseldorf Institute for Competition Economics (DICE)

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