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Contribution Details
| Type | Master's Thesis |
| Scope | Discipline-based scholarship |
| Title | ECB’s Non-standard Monetary Policy Measures during the Sovereign Debt Crisis and their Impact on Banks in the Eurosystem |
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| Institution | University of Zurich |
| Faculty | Faculty of Economics, Business Administration and Information Technology |
| Date | 2016 |
| Abstract Text | Contrasting the phenomena of historic systemic crises in which bank runs mainly emanated from the undesirable equilibrium inherent in demand deposit contracts, leading to immediate withdrawal of bank deposits, the recent global financial crisis, and the European sovereign debt crisis centered on dry-ups in bank refinancing in wholesale funding markets. The sovereign debt crisis in particular is characterized by a geographical fragmentation of liquidity in global financial markets, causing banks to experience a significant liquidity squeeze, and leading to inconsistencies between the monetary policy stance and cost of interbank credit. In an environment with strong financial frictions and a binding zero lower bound on the policy rate, the European Central Bank [ECB] reacted to the increasing pressure on bank balance sheets by resorting to a variety of non-standard monetary policy measures, largely revolving around changes in the maturity profile and the liquidity-providing mechanism of its refinancing operations. Specifically, in late 2011 and early 2012, the ECB allotted over one trillion Euros via two fixed rate, full allotment, longer-term refinancing operations [LTRO] with a prolonged duration of three years. |
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