Abstract
Chiaramonte investigates the role of central banks and the interbank market in managing banking liquidity during the global financial crisis (GFC). Focusing on the link between monetary policy and liquidity management, the chapter analyzes the operating framework for the three main central banks involved in the crisis (the ECB, FED and Bank of England) and the exceptional instruments used to deal with the crisis. The author reviews the main theoretical contributions related to the role of the interbank market in the transmission of financial crises, and the functioning of this market during the GFC.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Aghion, P., Bolton, P., & Fries, S. (1999). Optimal Design of Bank Bailouts: The Case of Transition Economies. Journal of Institutional and Theoretical Economies, 155, 51–70.
Allen, F., & Gale, D. (1998). Optimal Financial Crises. Journal of Finance, 53, 1245–1284.
Bank for International Settlement (BIS). (2009, May). Monetary Policy Frameworks and Central Bank Market Operations.
Bank of England. (1999, April). The Trasmission Mechanism of Monetary Policy.
Battacharya, S., & Gale, D. (1987) Preference Shocks, Liquidity, and Central Bank Policy. In W. A. Barnett & K. J. Singleton (Ed.), New Approaches to Monetary Economics. Cambridge: Cambridge University Press.
Bernanke, B. S. (2009, January 13). The Crisis and the Policy Response. Speech at London School of Economics, London. Available on: http://www.federalreserve.gov/newsevents/speech/2009speech.htm.
Board of the Governor of the Federal Reserve System. (2005, June). The Federal Reserve System: Purposes and Functions.
Brierley, P. (2009, June 5). The UK Special Resolution Regime for Failing Banks in an International Context (Financial Stability Paper). Bank of England.
Chari, V. V., & Jagannathan, R. (1988). Banking Panics, Information, and Rational Expectation Equilibrium. Journal of Finance, 43, 749–60.
Chen, Z. (1999). Banking Panics: The Role of the First-Come, First-Served Rule and Information Externalities. Journal of Political Economy, 107, 946–968.
Cheun, S., von Koppen-Mertes, I., & Weller, B. (2009, December). The Collateral Frameworks of the Eurosystem, the Federal Reserve System and the Bank of England and the Financial Turmoil (ECB Occasional Paper Series 107).
De Bandt, O. (1995). Competition Among Financial Intermediaries and the Risk of Contagious Failures (Working Papers, Banque de France n. 30).
De Bandt, O., & Hartmann, P. (2000, November). Systemic Risk: A Survey (ECB Working Paper Series 35).
Diamond, D. W., & Dybvig, P. H. (1983). Bank Runs, Deposit Insurance, and Liquidty. Journal of Political Economy, 91, 401–419.
European Central Bank (ECB). (2009, April). Annual Report.
European Central Bank (ECB). (2010, June). Monthly Bulletin.
European Central Bank (ECB). (2011, January). The Monetary Policy of the ECB.
Flannery, M. (1996). Financial Crises, Payment System Problems, and Discount Window Lending. Journal of Money, Credit, and Banking, 28, 804–824.
Freixas, X., Parigi, B., & Rochet, J. (2000). Systemic Risk Interbank Relations and Liquidity Provision by the Central Bank. Journal of Money, Credit and Banking, 32, 611–638.
Gorton, G. (1985). Bank Suspension of Convertibility. Journal of Monetary Economics, 15, 177–193.
Kohn, D. L. (2009, April 18). Monetary Policy in the Financial Crisis. Speech at the Conference in Honor of Dewey Daane, Nashville. Available on: http://www.federalreserve.gov/newsevents/speech/2009speech.htm.
Lemke, T. P., Lins, G. T., & Picard, M. E. (2013). Mortgage-Backed Securities. Clark Boadman Callaghan.
Papademos, L. (2009, May 27). The Role of the ECB in the Financial Crisis Management. Speech at the Conference on the Cost of the Crisis: Planning an Exit Strategy, London. Available on: www.ecb.int.
Postlewaite, A., & Vives, X. (1987). Bank Runs as an Equilibrium Phenomenon. Journal of Political Economy, 95, 485–491.
Shelder, G., & Maurer, M. (1998). Interbank Lending and Systemic Risk: An Empirical Analysis for Switzerland. Swiss Journal of Economics and Statistics, 134, 685–704.
Smith, B. D. (1991). Bank Panics, Suspensions, and Geography: Some Notes on the ‘Contagion of Fear’ in Banking. Economic Inquiry, 29, 230–248.
Wu, T. (2008, May). On the Effectiveness of the Federal Reserve’s New Liquidity Facilities (Federal Reserve Bank of Dallas Working Paper 0808).
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2018 The Author(s)
About this chapter
Cite this chapter
Chiaramonte, L. (2018). The Role of Central Banks and the Interbank Market in Managing Bank Liquidity During the Global Financial Crisis. In: Bank Liquidity and the Global Financial Crisis. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-94400-5_4
Download citation
DOI: https://doi.org/10.1007/978-3-319-94400-5_4
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-319-94399-2
Online ISBN: 978-3-319-94400-5
eBook Packages: Economics and FinanceEconomics and Finance (R0)