Excess liquidity and the money market in the euro area

Renaud Beaupain and Alain Durré ()

Journal of Macroeconomics, 2016, vol. 47, issue PA, 33-44

Abstract: This paper assesses the impact of the fixed-rate full-allotment procedure implemented by the European Central Bank (ECB) in October 2008 on the functioning of the interbank money market. More specifically, our work examines whether the excess liquidity positions of financial institutions observed during the fixed-rate full-allotment period have altered the activity and the liquidity of the overnight segment of the euro area money market. In normal times, the limited amount of excess liquidity makes the dynamics of the money market insensitive to it. In contrast, the introduction of the fixed-rate full-allotment procedure – as one prominent unconventional measure of the ECB – has made the dynamics of the money market growingly dependent on the time-varying level of excess liquidity in the euro area.

Keywords: Excess liquidity; Fixed-rate full-allotment; Monetary policy; Money market activity; Money market liquidity (search for similar items in EconPapers)
JEL-codes: C32 E52 E58 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S016407041500107X
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Excess liquidity and the money market in the euro area (2016)
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:eee:jmacro:v:47:y:2016:i:pa:p:33-44

DOI: 10.1016/j.jmacro.2015.09.001

Access Statistics for this article

Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos

More articles in Journal of Macroeconomics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().