The liquidity consequences of the euro area sovereign debt crisis

William Allen and Richhild Moessner

No 390, BIS Working Papers from Bank for International Settlements

Abstract: We examine the liquidity effects of the euro area sovereign debt crisis, including its effects on euro area banks as a group, on intra-euro area financial flows, on the supply of and demand for collateral, and on international liquidity. The lending capacity of the euro area banking system has been much weakened, despite the remarkable growth of the operations of the Eurosystem, including its greatly increased lending, its intermediation between national central banks in surplus and deficit countries and its collateral policy. The euro crisis has also created international liquidity stresses. We find that central bank swap lines have only had limited effectiveness in alleviating the stresses, probably owing to some stigma being attached to their use.

Keywords: Financial crisis; liquidity; foreign exchange swaps; central bank swap lines (search for similar items in EconPapers)
Pages: 39 pages
Date: 2012-11
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec and nep-mon
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Citations: View citations in EconPapers (22)

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Related works:
Journal Article: The Liquidity Consequences of the Euro Area Sovereign Debt Crisis (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:390

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