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Public and private liquidity during crises times: evidence from Emergency Liquidity Assistance (ELA) to Greek banks

Antonis Kotidis, Dimitrios Malliaropulos and Elias Papaioannou ()
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Antonis Kotidis: Board of Governors of the Federal Reserve System

No 304, Working Papers from Bank of Greece

Abstract: In a surprise move during a crisis, the ECB excluded Greek Government Bonds from the set of eligible collateral in monetary policy operations. In turn, Greek banks turned to Emergency Liquidity Assistance (ELA) to meet their funding needs. ELA replenished losses from all funding sources, consistent with its role as LOLR. However, in anticipation to a switch to ELA, banks reduced their interbank and corporate lending as a result of its higher cost and conditionality. Although multi-lender firms compensated for the associated credit crunch, single-lender firms that were not able to establish new lending relationships experienced a reduction in their exports.

Keywords: Central Bank Interventions; Lender of Last Resort (LOLR); Collateral Framework; Emergency Liquidity Assistance (ELA) (search for similar items in EconPapers)
JEL-codes: E58 G21 G28 (search for similar items in EconPapers)
Pages: 49
Date: 2022-09
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec and nep-mon
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