Euro Area Monetary Policy in Uncharted Waters

By Emil Stavrev, Thomas Harjes, Martin Cihak

August 1, 2009

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Format: Chicago

Emil Stavrev, Thomas Harjes, and Martin Cihak. Euro Area Monetary Policy in Uncharted Waters, (USA: International Monetary Fund, 2009) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We analyze the European Central Bank's (ECB's) response to the global financial crisis. Our results suggest that even during the crisis, the core part of ECB's monetary policy transmission-from policy rates to market rates-has continued to operate, but at a decreased efficiency. We also find some evidence that the ECB's non-standard measures, namely the lengthening of the maturity of monetary policy operations and the provision of funds at the fixed rate, reduced money market term spreads, facilitating the pass-through from policy to market rates. Furthermore, the results imply that the substantial increase in the ECB's balance sheet may have contributed to a reduction in government bond term spreads.

Subject: Banking, Bond yields, Central bank policy rate, Financial crises, Yield curve

Keywords: Central bank, Financial crisis, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/185
Stock No:

WPIEA2009185
ISBN:

9781451873320
ISSN:

1018-5941

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