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Euro area interbank fragmentation: bad sovereign or bad balance sheets?
[Zone euro et fragmentation interbancaire: mauvais souverain ou mauvais bilans ?]

Author

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  • Silvia Gabrieli
  • Claire Labonne

Abstract

Between 2011 and the announcement of Outright Monetary Transactions (OMTs), high rates of non-performing exposures to peripheral countries hindered banks’ access to the interbank market. Sizeable holdings of peripheral countries’ sovereign bonds also increased the price paid for interbank funding. The introduction of OMTs in 2012 and Targeted Longer-Term Refinancing Operations (TLTROs) in 2014 successfully curbed these channels of fragmentation risk. Entre 2011 et l’annonce des OMT, des ratios élevés de créances douteuses sur les pays périphériques ont entravé l’accès des banques au marché interbancaire. La détention importante d’obligations émises par les souverains périphériques a également accru le coût du financement interbancaire. L’introduction des OMT en 2012 et des TLTRO en 2014 a réussi à réduire ces sources de fragmentation.

Suggested Citation

  • Silvia Gabrieli & Claire Labonne, 2018. "Euro area interbank fragmentation: bad sovereign or bad balance sheets? [Zone euro et fragmentation interbancaire: mauvais souverain ou mauvais bilans ?]," Eco Notepad (in progress) 92, Banque de France.
    • Handle: RePEc:bfr:econot:92
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