Euro Area Policies: Financial Sector Assessment Program-Technical Note-Systemic Liquidity Management

International Monetary Fund

No 2018/229, IMF Staff Country Reports from International Monetary Fund

Abstract: The flexibility shown by the ECB/Eurosystem in adapting its framework, as required by circumstances, has helped improve funding and liquidity conditions. Compared to the situation pre-crisis, the ECB/Eurosystem has provided liquidity against a broader range of collateral and for as long as four years in terms of maturity; extended liquidity in foreign currency; conducted outright purchases of public and private sector assets (now tapering off); and reduced interest rates into negative territory. In these arrangements, policy is directed from the center, but is implemented mostly by the National Central Banks (NCBs); risks are largely shared. Market participants are complimentary about the role the ECB/Eurosystem has played in backstopping the financial system and its forward guidance on monetary policy.

Keywords: ISCR; CR; Eurosystem monetary policy operation; U.S. dollar; asset purchase; deposit facility; ECB banking supervision; Eurosystem swap lines; FX reserve; counterparty framework; ECB staff analysis; ECB balance sheet publication; ECB deposit facility; ECB FX reserve; monetary policy operation; ECB supervision; routine ECB; Lender of last resort; Liquidity; Collateral; Financial sector stability; Financial statements; Global (search for similar items in EconPapers)
Pages: 44
Date: 2018-07-19
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Citations: View citations in EconPapers (2)

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