Fixed- and Variable-Rate Tenders in the Management of Liquidity by the Eurosystem: Implications of the Recent Credit Crisis

Margarida Catalão-Lopes

International Journal of Central Banking, 2010, vol. 6, issue 2, 199-230

Abstract: Most liquidity-providing operations of the European Central Bank (ECB) have been conducted through variable-rate tenders. However, fixed rates were first employed in the main refinancing operations (MROs) and are still used in other liquidity management operations. In October 2008, the ECB decided to carry MROs again at a fixed rate. In a simple threestage game in which banks can obtain liquidity through the open-market operations of the ECB, through interbank transactions, or through “standing facilities,” this paper revisits the dilemma between fixed- and variable-rate procedures, with an emphasis on the scenarios that are particularly relevant under the recent credit crisis, namely collateral shortage, rationing in the interbank market, and non-acute estimation by the ECB of the system’s liquidity needs.

JEL-codes: D44 E52 G21 (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.ijcb.org/journal/ijcb10q2a7.pdf (application/pdf)
http://www.ijcb.org/journal/ijcb10q2a7.htm (text/html)

Related works:
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:ijc:ijcjou:y:2010:q:2:a:7

Access Statistics for this article

International Journal of Central Banking is currently edited by Loretta J. Mester

More articles in International Journal of Central Banking from International Journal of Central Banking
Bibliographic data for series maintained by Bank for International Settlements ().