Banks' Behaviour in the European Money Market and the Operational Framework of the Eurosystem

Ulrike Neyer
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Ulrike Neyer: Martin-Luther-University Halle-Wittenberg

No 158, Royal Economic Society Annual Conference 2003 from Royal Economic Society

Abstract: The Eurosystem has stated its intention to reformulate important aspects of its operational framework. This paper presents a model to analyze banks' behaviour in the European money market. Its main result is that the suggested alterations are sensible, but that further improvements should be undertaken. Under the current framework under- and overbidding behaviour in the main refinancing operations and wildly differing provisions of required reserves can occur. This can be avoided if first, the maturities of the main refinancing operations do not overlap, and second, if the required reserves are not remunerated at an average rate.

JEL-codes: E52 E58 G21 (search for similar items in EconPapers)
Date: 2003-06-04
New Economics Papers: this item is included in nep-cfn, nep-ifn and nep-mon
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