Monetary policy and cross-border interbank market fragmentation: lessons from the crisis
Tobias Blattner and
EconStor Preprints from ZBW - Leibniz Information Centre for Economics
We present a two-country model with an enhanced banking sector 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: Interbank market; monetary union; financial frictions; cross-border capital flows; unconventional monetary policy (search for similar items in EconPapers)
JEL-codes: E44 E52 F32 F36 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
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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 (2020)
Working Paper: Monetary policy and cross-border interbank market fragmentation: lessons from the crisis (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:157881
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