The Sovereign-Bank Nexus: the Role of Debt and Monetary Policy

Hernán Seoane

No 29, EconPol Policy Reports from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: This policy report analyzes one aspect of the sovereign-bank nexus: the feedback effects between banks and sovereigns derived from the holdings of sovereign debt in domestic banks. We study how this relationship evolved during the European debt crisis and how it responded to the implementation of ECB monetary policy based on Open Market Operations and Marginal Lending Facilities. We find evidence of carry trade behavior by banks and we have some mild evidence that this channel may have been boosted by the liquidity provision policies.

Date: 2020
New Economics Papers: this item is included in nep-cba, nep-eec and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.ifo.de/DocDL/EconPol_Policy_Report_29_Sovereign_Bank_Nexus.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:econpr:_29

Access Statistics for this paper

More papers in EconPol Policy Reports from ifo Institute - Leibniz Institute for Economic Research at the University of Munich Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().