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- Title
Monetary Policy and Cross-Border Interbank Market Fragmentation: Lessons from the Crisis.
- Authors
Blattner, Tobias S.; Swarbrick, Jonathan M.
- Abstract
We present a two-country model featuring risky lending and cross-border interbank market frictions. We find that (i) the strength of the financial accelerator, when applied to banks operating under uncertainty in an interbank market, will critically depend on the economic and financial structure of the economy; (ii) adverse shocks to the real economy can be the source of banking crisis, causing an increase in interbank funding costs, aggravating the initial shock; and (iii) asset purchases and central bank long-term refinancing operations can be effective substitutes for, or supplements to, conventional monetary policy.
- Subjects
INTERBANK market; MONETARY policy; ECONOMIC structure; CENTRAL banking industry; CRISES
- Publication
B.E. Journal of Macroeconomics, 2021, Vol 21, Issue 1, p323
- ISSN
2194-6116
- Publication type
Article
- DOI
10.1515/bejm-2019-0097