Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322078 
Year of Publication: 
2025
Series/Report no.: 
ECB Working Paper No. 3055
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Central banks increasingly act as market-makers-of-last-resort, yet the impact and exit of such interventions remain poorly understood. Using euro-area data, we analyze the cycle of market freeze, intervention, and exit in short-term debt markets. A run on money market funds (MMFs) triggered a collapse in these markets in March 2020. Firms replaced only 27% of lost funding through credit lines. The European Central Bank intervened, fully replacing MMFs for some firms and allowing them to issue more debt at lower rates and longer maturities. After the ECB's exit, more-exposed firms faced higher yields (+20.2 bps), reduced MMF investments, and fewer new relationships. Credit line take-up did not materially change post-exit.
Subjects: 
Short-term corporate debt
market-maker-of-last resort
central bank intervention
exit
commercial paper
money market funds
JEL: 
G11
G23
G32
E58
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-7237-6
Document Type: 
Working Paper

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