The collateral frameworks of the Eurosystem, the Federal Reserve System and the Bank of England and the financial market turmoil
AbstractIn response to the turmoil in global financial markets which began in the second half of 2007, central banks have changed the way in which they implement monetary policy. This has drawn particular attention to the type of collateral used for backing central banks’ temporary open market operations and the range of counterparties which can participate in these operations. This paper provides an overview of the features of the different operational and collateral frameworks of three central banks that have been significantly affected by the crisis: the Eurosystem, the Federal Reserve System and the Bank of England. The paper describes the factors that shaped the three frameworks prior to the turmoil. It then describes the actions the three central banks took in response to the turmoil and analyses to what extent these actions were dependent on the initial design of the operational and collateral framework. JEL Classification: E52, E58, G01, G20.
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Bibliographic InfoPaper provided by European Central Bank in its series Occasional Paper Series with number 107.
Length: 47 pages
Date of creation: Dec 2009
Date of revision:
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Find related papers by JEL classification:
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- G01 - Financial Economics - - General - - - Financial Crises
- G20 - Financial Economics - - Financial Institutions and Services - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-16 (All new papers)
- NEP-BAN-2010-01-16 (Banking)
- NEP-CBA-2010-01-16 (Central Banking)
- NEP-MON-2010-01-16 (Monetary Economics)
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- Pikkarainen, Pentti, 2010. "Central bank liquidity operations during the financial market and economic crisis: observations, thoughts and questions," Research Discussion Papers 20/2010, Bank of Finland.
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