The Banco de Portugal balance sheet expansion during the last two decades: a monetary policy perspective

Joana Sousa Leite, Diana Correia, Cristina Coutinho and Carmen Camacho

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: This paper analyses the evolution dynamics of the Banco de Portugal balance sheet since the beginning of the Stage III of the EMU. Following the global financial crisis, the evolution of the Banco de Portugal balance sheet was initially driven by an increase in liabilities, namely in intra-Eurosystem liabilities related to TARGET and current accounts, reflecting the liquidity provided through monetary policy refinancing operations, which was either deposited in the central bank or transferred to euro area banks outside of Portugal. Since 2015, broader monetary policy decisions regarding the asset side of the balance sheet were designed to support economic growth and bring inflation back to the 2% target. Between 1999 and 2021, the Banco de Portugal balance sheet expansion was mostly driven by the asset purchase programmes and significant increases in central bank funding to banks and in intra-Eurosystem claims, the latter aggregate being explained by the inflow of banknotes related to the tourism activity in Portugal.

JEL-codes: E41 E44 E51 E52 E58 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-acc, nep-ban, nep-cba, nep-his and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:o202205

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