- 9 February 2023
- WORKING PAPER SERIES - No. 2778Details
- We study how monetary policy affects local market competition in a union of countries ex-periencing different economic conditions: the euro area. We find that when monetary conditions tighten (loosen), from the point of view of an individual economy, market concentration increases (declines). This effect is more pronounced when interest rates have been low-for-long, and it is stronger in sectors that are relatively more sensitive to changes in financing conditions. The underlying mechanism is a decline (increase) in short-term debt and investment by smaller and medium-size firms, relative to large firms, following monetary policy tightening (easing).
- JEL Code
- E2 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy
G1 : Financial Economics→General Financial Markets
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
- 24 May 2018
- FINANCIAL STABILITY REVIEW - BOXFinancial Stability Review Issue 1, 2018Details
- This box assesses potential financial stability concerns related to the rapidly growing market for crypto-assets. Crypto-assets (e.g. bitcoin, ether and ripple) are a new, innovative and high-risk digital asset class.21 Recent price developments and market interest in crypto-assets have given rise to concerns about potential financial stability implications. This box presents key facts on crypto-assets, concluding that they do not currently pose a material risk to financial stability in the euro area, but warrant careful monitoring.
- 29 November 2017
- FINANCIAL STABILITY REVIEW - ARTICLERecent Developments in Euro Area Repo Markets, Regulatory Reforms and their Impact on Repo Market FunctioningFinancial Stability Review Issue 2, 2017Details
- Effectively functioning repo markets are of key importance for both financial stability and monetary policy, but the excessive use of repos may also be a source of systemic risk as witnessed during the recent financial crisis. Regulatory reforms introduced since the start of the crisis have aimed to contain systemic risk related to the excessive build-up of leverage and unstable funding, but recently some concerns have been raised about their potential effects on the functioning of the repo market. This special feature presents new evidence on the drivers of banks’ activity in the repo market with respect to regulatory reforms. In addition, it takes a closer look at the repo market structure and pricing dynamics, in particular around banks’ balance sheet reporting dates. While the observed volatility around reporting dates suggests that the calculation methodology for some regulatory metrics should be reviewed, overall, the findings indicate that unintended consequences of regulatory reforms on the provision of repo services by euro area banks have not been material.
- JEL Code
- G00 : Financial Economics→General→General