Monetary Policy and Cross-Border Interbank Market Fragmentation: Lessons from the Crisis
Tobias Blattner and
Staff Working Papers from Bank of Canada
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: Business fluctuations and cycles; Credit and credit aggregates; International financial markets; Monetary policy framework; Transmission of monetary policy (search for similar items in EconPapers)
JEL-codes: E52 F36 (search for similar items in EconPapers)
Pages: 46 pages
New Economics Papers: this item is included in nep-ban, nep-cba, nep-dge, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
https://www.bankofcanada.ca/wp-content/uploads/2020/08/swp2020-34.pdf Full text (application/pdf)
Journal Article: Monetary Policy and Cross-Border Interbank Market Fragmentation: Lessons from the Crisis (2021)
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)
Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:20-34
Access Statistics for this paper
More papers in Staff Working Papers from Bank of Canada 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada. Contact information at EDIRC.
Bibliographic data for series maintained by ().