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Some Implications of New Regulatory Measures for Euro Area Money Markets

Author

Listed:
  • Doran, David

    (Central Bank of Ireland)

  • Kirrane, Caroline

    (Central Bank of Ireland)

  • Masterson, Mary

    (Central Bank of Ireland)

Abstract

A number of banking and financial market regulations have been proposed in response to the financial crisis; in particular the Basel III solvency and liquidity rules. These enhanced regulatory standards intend to ensure that banks and banking systems are significantly more resilient in the future than was the case in the run-up to the financial crisis. However, there have been concerns that the extent and range of the new regulatory measures may lead to unintended shifts in market behaviour. In consideration of these concerns, in January 2014 the Basel Committee announced a number of significant amendments to the Basel III ratios. This paper reviews the potential implications for euro area money markets and monetary policy that explain, in part, why the recent amendments were considered necessary. In addition, the European Market Infrastructure Regulation (EMIR) is briefly considered. We conclude that, while the latest Basel III amendments will mitigate some of the previous concerns, the proposed measures may still have adverse consequences for money markets.

Suggested Citation

  • Doran, David & Kirrane, Caroline & Masterson, Mary, 2014. "Some Implications of New Regulatory Measures for Euro Area Money Markets," Quarterly Bulletin Articles, Central Bank of Ireland, pages 91-102, January.
    • Handle: RePEc:cbi:qtbart:y:2014:m:01:p:91-102
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    File URL: https://centralbank.ie/docs/default-source/publications/quarterly-bulletins/qb-archive/2014/qb1-2014.pdf?sfvrsn=6#page=93
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    Cited by:

    1. Sitikantha Pattanaik & Rajesh Kavediya & Angshuman Hait, 2018. "Basel III liquidity coverage ratio and the operating target of monetary policy: the unintended discord," Journal of Banking Regulation, Palgrave Macmillan, vol. 19(2), pages 160-173, April.

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