Monetary policy transmission and non-bank financial intermediation

Sofia Anyfantaki, Dominic Cucic, Daniel Fricke, Philipp Hartmann, Christoph Kaufmann, Elizaveta Lukmanova, Angela Maddaloni and Ricardo Barahona

No 391, Occasional Paper Series from European Central Bank

Abstract: The growing importance of non‑bank financial intermediaries (NBFIs) also has important implications for the transmission of monetary policy in the euro area. It alters the composition of credit supply and strengthens the role of market‑based finance for the corporate sector. In the aggregate, NBFIs tend to amplify the transmission of monetary policy within the financial sector. In particular, intermediaries with uninsured short‑term funding amplify monetary transmission to credit. This becomes particularly pronounced during episodes of financial stress, when liquidity pressures and valuation losses can trigger asset sales and spillovers to banks. By contrast, institutions that benefit from stable long-term funding, such as insurers, pension funds and certain specialised finance companies, may attenuate the transmission of monetary policy to credit, although only to a limited extent. The implications for monetary policy transmission arising from NBFIs also extend beyond lending, notab JEL Classification: G2, G23, G28

Keywords: collateral; insurers; investment funds; monetary policy; non-bank intermediation (search for similar items in EconPapers)
Date: 2026-07
Note: 229414
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