Cross-Border Liquidity, Relationships and Monetary Policy: Evidence from the Euro Area Interbank Crisis

2014 ◽  
Author(s):  
Puriya Abbassi ◽  
Falko Fecht ◽  
Falk Bräuning ◽  
Jose-Luis Peydro
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Cross Border

scholarly journals The rise of national central banks' TARGET balances in the euro area: a comment

2019 ◽  
Vol 16 (16.2) ◽  
pp. 161-168
Author(s):  
Andrea Terzi
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
European Central Bank ◽  
Central Banks ◽  
Capital Flight ◽  
Current Account Surplus ◽  
Decomposition Approach ◽  
Portfolio Rebalancing ◽  
European Central ◽  
Cross Border

With the implementation of the Eurosystem's asset purchase programme (APP), national central banks’ TARGET balances have risen. For the European Central Bank, this reflects cross-border payments and portfolio rebalancing in the context of the APP. Minenna et al. (2018) disagree and claim that the causes of rising TARGET balances (2015–2017) have been the persistent current-account surplus of Germany and ‘capital flight.’ This comment explains that rising TARGET balances occur under specific monetary policy configurations and that the context of the APP was critical to account for rising TARGET balances. It then questions the decomposition approach employed by the authors by arguing that it shows accounting correspondences, not causality, and concludes that there is no established two-way association between TARGET balances and actual vulnerabilities of the euro area.

scholarly journals US vs. Euro Area

2019 ◽  
Vol 19 (199) ◽  
Author(s):  
Eugenio Cerutti ◽  
Carolina Osorio Buitron
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Negative Impact ◽  
Financial Sector ◽  
Bank Lending ◽  
Real Sector ◽  
Cross Border ◽  
The Us ◽  
The Impact ◽  
Us Monetary Policy

This paper analyzes the drivers of cross-border bank lending to 49 Emerging Markets (EMs) during the period 1990Q1-2014Q4, by assessing the impact of monetary, financial and real sector shocks in both the US and the euro area. The literature has traditionally highlighted the influence of US monetary policy on driving cross-border bank flows, and more recently the importance of both US and Euro Area (EA) financial/banking sectors’ related variables. Our contribution is the simultaneous analysis of the role of these US and EA drivers, as well as their interactions with real sector shocks. We corroborate the negative impact of US monetary policy tightening on cross-border lending to EMs, but we find that EA monetary policy seems to have an impact mostly on Emerging Europe, reflecting the fact that cross-border lending to most other EM regions is dollar denominated. We also find that real sector shocks in both the US and EA trigger an increase in cross-border lending, but less in EA when modeling the financial sector. Finally, for financial sector shocks, such as those associated with a decrease in bank leverage, our results indicate a broad-based overall contraction of cross-border lending if the shock originates in the US, and heterogenous effects across borrowing regions if the shock originates in the EA.

scholarly journals The rise of national central banks' TARGET balances in the euro area: a comment

2019 ◽  
Vol 16 (16.2) ◽  
pp. 161-168
Author(s):  
Andrea Terzi
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
European Central Bank ◽  
Central Banks ◽  
Capital Flight ◽  
Current Account Surplus ◽  
Decomposition Approach ◽  
Portfolio Rebalancing ◽  
European Central ◽  
Cross Border

With the implementation of the Eurosystem's asset purchase programme (APP), national central banks' TARGET balances have risen. For the European Central Bank, this reflects cross-border payments and portfolio rebalancing in the context of the APP. Minenna et al. (2018) disagree and claim that the causes of rising TARGET balances (2015–2017) have been the persistent current-account surplus of Germany and ‘capital flight.’ This comment explains that rising TARGET balances occur under specific monetary policy configurations and that the context of the APP was critical to account for rising TARGET balances. It then questions the decomposition approach employed by the authors by arguing that it shows accounting correspondences, not causality, and concludes that there is no established two-way association between TARGET balances and actual vulnerabilities of the euro area.

scholarly journals The rise of national central banks' TARGET balances in the euro area: a comment

2019 ◽  
Vol 16 (2) ◽  
pp. 161-168
Author(s):  
Andrea Terzi
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
European Central Bank ◽  
Central Banks ◽  
Capital Flight ◽  
Current Account Surplus ◽  
Decomposition Approach ◽  
Portfolio Rebalancing ◽  
European Central ◽  
Cross Border

With the implementation of the Eurosystem's asset purchase programme (APP), national central banks' TARGET balances have risen. For the European Central Bank, this reflects cross-border payments and portfolio rebalancing in the context of the APP. Minenna et al. (2018) disagree and claim that the causes of rising TARGET balances (2015–2017) have been the persistent current-account surplus of Germany and ‘capital flight.’ This comment explains that rising TARGET balances occur under specific monetary policy configurations and that the context of the APP was critical to account for rising TARGET balances. It then questions the decomposition approach employed by the authors by arguing that it shows accounting correspondences, not causality, and concludes that there is no established two-way association between TARGET balances and actual vulnerabilities of the euro area.

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