Liquidity Management Under Market Turmoil: Experience of the European Central Bank in the First Year of the 2007–2008 Financial Market Crisis

Nuno Cassola, Cornelia Holthausen and Flemming Würtz
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Nuno Cassola: European Central Bank, Germany
Cornelia Holthausen: European Central Bank, Germany
Flemming Würtz: European Central Bank, Germany

Chapter 13 in The First Credit Market Turmoil of the 21st Century:Implications for Public Policy, 2009, pp 195-228 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThe following sections are included:IntroductionECB Liquidity Management Under Normal Market ConditionsLast day of the reserve maintenance periodBefore the last day of the reserve maintenance periodECB Liquidity Management Under Turbulent Market ConditionsAutomatic stabilizersCounterparties and size of operationsReserve requirementsEligible assetsMarginal lending facilityLiquidity managementFixed rate tenders with full allotmentThe separation principleFrontloadingNarrow corridor with large surplusLengthening the maturity structure of refinancing and the term auction facilityAn Overall Assessment of the Liquidity PolicyShort-term interest rates before and during the turmoilRecourse to standing facilitiesLimits to the current frontloading policyConclusions and Open IssuesReferences

Keywords: Financial Crises; Systemic Risk; Credit Market Turmoil; International Financial Markets (search for similar items in EconPapers)
Date: 2009
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