Is Stigma Attached to the European Central Bank's Marginal Lending Facility?

Helene Lee and Asani Sarkar

No 20180416, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: The European Central Bank (ECB)’s marginal lending facility has been used by banks to borrow funds both in normal times and during the crisis that started in 2007. In this post, we argue that how a central bank communicates the purpose of a facility is important in determining how users of the facility are perceived. In particular, the ECB never refers to the marginal lending facility as a back-up source of funds. The ECB’s neutral approach may be a key factor in explaining why financial institutions are less reluctant to use the marginal lending facility than the Fed’s discount window.

Keywords: Crisis; ECB; Standing Lending Facility (search for similar items in EconPapers)
JEL-codes: E5 (search for similar items in EconPapers)
Date: 2018-04-16
New Economics Papers: this item is included in nep-mac and nep-mon
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