Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/246201 
Authorgroup: 
Work stream on non-bank financial intermediation
Year of Publication: 
2021
Series/Report no.: 
ECB Occasional Paper No. 270
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
The financing structure of the euro area economy has evolved since the global financial crisis with non-bank financial intermediation taking a more prominent role. This shift affects the transmission of monetary policy. Compared with banks, non-bank financial intermediaries are more responsive to monetary policy measures that influence longer-term interest rates, such as asset purchases. The increasing role of debt securities in the financing structure of firms also leads to a stronger transmission of long-rate shocks. At the same time, short-term policy rates remain an effective tool to steer economic outcomes in the euro area, which is still highly reliant on bank loans. Amid a low interest rate environment, the growth of market-based finance has been accompanied by increased credit, liquidity and duration risk in the non-bank sector. Interconnections in the financial system can amplify contagion and impair the smooth transmission of monetary policy in periods of market distress. The growing importance of non-bank financial intermediaries has implications for the functioning of financial market segments relevant for monetary policy transmission, in particular the money markets and the bond markets.
Subjects: 
Non-bank intermediation
Monetary policy transmission
Asset purchases,Low interest rates
Risk-taking
Financial markets stress
JEL: 
E4
E5
G2
G38
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4824-1
Document Type: 
Research Report

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