Skip to content

A model of the Eurosystem's operational framework and the euro overnight interbank market

Research output: Contribution to journalArticlepeer-review

  • Achim Hauck
  • Ulrike Neyer
This paper develops a theoretical model which replicates main institutional features of the euro overnight interbank market and the Eurosystem's operational framework which has been in place since September 2008. Main ingredients of the model are frictions in the form of participation costs in the interbank market, a refinancing operation with unlimited liquidity supply and two standing facilities offered by the central bank. The model can explain several stylized facts observed during the financial crisis as the decline in interbank borrowing and the interbank rate, the increased borrowing from the Eurosystem and the strong recourse to its deposit facility. Furthermore, we discuss some policy implications.
Original languageEnglish
Pages (from-to)S65-S82
JournalEuropean Journal of Political Economy
Issue numberSupplement
Early online date27 Jul 2013
Publication statusPublished - Jun 2014


  • HAUCK_2014_cright_EJPE_A model of the Eurosystem's operational framework

    Rights statement: NOTICE: this is the author’s version of a work that was accepted for publication in European Journal of Political Economy. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in European Journal of Political Economy, 34, (2014), DOI: 10.1016/j.ejpoleco.2013.06.010

    Accepted author manuscript (Post-print), 799 KB, PDF document

Related information

Relations Get citation (various referencing formats)

ID: 239280