Monetary Policy and Cross-Border Interbank Market Fragmentation: Lessons from the Crisis

Blattner Tobias S. () and Jonathan Swarbrick
Additional contact information
Blattner Tobias S.: European Central Bank, Sonnemannstrasse 20, 60314, Frankfurt am Main, Hessen, Germany

The B.E. Journal of Macroeconomics, 2021, vol. 21, issue 1, 323-368

Abstract: We present a two-country model featuring risky lending and cross-border interbank market frictions. We find that (i) the strength of the financial accelerator, when applied to banks operating under uncertainty in an interbank market, will critically depend on the economic and financial structure of the economy; (ii) adverse shocks to the real economy can be the source of banking crisis, causing an increase in interbank funding costs, aggravating the initial shock; and (iii) asset purchases and central bank long-term refinancing operations can be effective substitutes for, or supplements to, conventional monetary policy.

Keywords: cross-border capital flows; financial frictions; interbank market; monetary union; unconventional monetary policy (search for similar items in EconPapers)
JEL-codes: E44 E52 F32 F36 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/bejm-2019-0097 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Working Paper: Monetary Policy and Cross-Border Interbank Market Fragmentation: Lessons from the Crisis (2020)
Working Paper: Monetary policy and cross-border interbank market fragmentation: lessons from the crisis (2018)
Working Paper: Monetary policy and cross-border interbank market fragmentation: lessons from the crisis (2017)
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:bpj:bejmac:v:21:y:2021:i:1:p:323-368:n:9

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/bejm/html

DOI: 10.1515/bejm-2019-0097

Access Statistics for this article

The B.E. Journal of Macroeconomics is currently edited by Arpad Abraham and Tiago Cavalcanti

More articles in The B.E. Journal of Macroeconomics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().