Eurozone repo markets are slowing policy transmission, ECB paper says
Dealer banks use market power to get better prices from other institutions
The structure of eurozone repo markets is hampering the transmission of the European Central Bank’s monetary policy, a working paper published by the ECB argues.
In Monetary policy transmission in segmented markets, Jens Eisenschmidt, Yiming Ma and Anthony Lee Zhang examine the eurozone repo market. They use transaction data on the repo market from the ECB’s Money Market Statistical Reporting dataset.
The eurozone repo market has two “fundamentally distinct segments,” the authors say. “The
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