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Recent developments in the sterling overnight money market

Author

Listed:
  • Christopher Jackson

    (Bank of England)

  • Mathew Sim

    (Bank of England)

Abstract

The sterling overnight money market plays an important role in the implementation of monetary policy. This article examines developments in this market since the peak of the financial crisis. Developments over this period include a fall in unsecured turnover and increasing use of secured transactions in overnight money markets. These trends have been driven by a number of factors, including perceptions of bank credit and liquidity risk, developments in the Bank’s operational framework, liquidity regulation and changes to banks’ business models. While some of these developments could be expected to unwind, other factors, such as the impact of new international liquidity regulation, are likely to persist in the longer term.

Suggested Citation

  • Christopher Jackson & Mathew Sim, 2013. "Recent developments in the sterling overnight money market," Bank of England Quarterly Bulletin, Bank of England, vol. 53(3), pages 223-233.
    • Handle: RePEc:boe:qbullt:0112
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    References listed on IDEAS

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    1. Michael Cross & Paul Fisher & Olaf Weeken, 2010. "The Bank's balance sheet during the crisis," Bank of England Quarterly Bulletin, Bank of England, vol. 50(1), pages 34-42.
    2. Michael Joyce & Matthew Tong & Robert Woods, 2011. "The United Kingdom’s quantitative easing policy: design, operation and impact," Bank of England Quarterly Bulletin, Bank of England, vol. 51(3), pages 200-212.
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    Cited by:

    1. Green, Christopher & Bai, Ye & Murinde, Victor & Ngoka, Kethi & Maana, Isaya & Tiriongo, Samuel, 2016. "Overnight interbank markets and the determination of the interbank rate: A selective survey," International Review of Financial Analysis, Elsevier, vol. 44(C), pages 149-161.
    2. Nick Butt & Alice Pugh, 2014. "Credit spreads: capturing credit conditions facing households and firms," Bank of England Quarterly Bulletin, Bank of England, vol. 54(2), pages 137-148.
    3. Bicu-Lieb, Andreea & Chen, Louisa & Elliott, David, 2020. "The leverage ratio and liquidity in the gilt and gilt repo markets," Journal of Financial Markets, Elsevier, vol. 48(C).
    4. Christopher Jackson & Joseph Noss, 2015. "A heterogeneous agent model for assessing the effects of capital regulation on the interbank money market under a corridor system," Bank of England working papers 548, Bank of England.
    5. Andreea Bicu & Louisa Chen & David Elliott, 2017. "The leverage ratio and liquidity in the gilt and repo markets," Bank of England working papers 690, Bank of England.
    6. Patrizia Ceccacci & Barbara Mazzetta & Stefano Nobili & Filippo Perazzoli & Mattia Persico, 2024. "Money market rate stabilization systems over the last 20 years: the role of the minimum reserve requirement," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 46, Bank of Italy, Directorate General for Markets and Payment System.
    7. Kevin Finan & Ana Lasaosa & Jamie Sunderland, 2013. "Tiering in CHAPS," Bank of England Quarterly Bulletin, Bank of England, vol. 53(4), pages 371-378.
    8. David Elliott & Joseph Noss, 2015. "Estimating market expectations of changes in Bank Rate," Bank of England Quarterly Bulletin, Bank of England, vol. 55(3), pages 273-282.
    9. Matthew Osborne, 2016. "Monetary policy and volatility in the sterling money market," Bank of England working papers 588, Bank of England.
    10. Berentsen, Aleksander & Kraenzlin, Sébastien & Müller, Benjamin, 2018. "Exit strategies for monetary policy," Journal of Monetary Economics, Elsevier, vol. 99(C), pages 20-40.
    11. Michael McLeay & Amar Radia & Ryland Thomas, 2014. "Money creation in the modern economy," Bank of England Quarterly Bulletin, Bank of England, vol. 54(1), pages 14-27.
    12. Thibaut Piquard & Dilyara Salakhova, 2019. "Secured and Unsecured Interbank Markets: Monetary Policy, Substitution and the Cost of Collateral," Working papers 730, Banque de France.
    13. Lloyd, S. P., 2017. "Overnight Indexed Swap Market-Based Measures of Monetary Policy Expectations," Cambridge Working Papers in Economics 1733, Faculty of Economics, University of Cambridge.
    14. Fukunaga, Ichiro & Kato, Naoya, 2016. "Japanese repo and call markets before, during, and emerging from the financial crisis," Journal of the Japanese and International Economies, Elsevier, vol. 39(C), pages 17-34.

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