The Supply and Demand for Eurosystem Deposits the First 18 Months

54 Pages Posted: 12 Dec 2002

See all articles by Ulrich Bindseil

Ulrich Bindseil

European Central Bank (ECB)

Franz Seitz

Technical University of Applied Sciences Weiden

Date Written: February 2001

Abstract

This paper describes the demand and supply factors affecting the amounts of deposits held by banks with the Eurosystem in the first 18 months of Stage Three of EMU and differences to the years before. The paper starts from the methodology adopted in a recent study by James Hamilton on "The supply and demand for Federal Reserve deposits". While the treatment of the autonomous liquidity factors is in principle similar, the modelling of open market operations and of the recourse to standing facilities diverge. These differences stem from different institutional settings, but also from somewhat different views on the accurate model. In a second part, the paper turns to prices by providing a simple econometric model capturing a large part of the variability of the difference between the EONIA rate (the price for daily funds) and the rate charged for the main refinancing operations.

Keywords: Monetary policy instruments, money markets, money market rate

JEL Classification: E52, E58

Suggested Citation

Bindseil, Ulrich and Seitz, Franz, The Supply and Demand for Eurosystem Deposits the First 18 Months (February 2001). Available at SSRN: https://ssrn.com/abstract=356005

Ulrich Bindseil (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Franz Seitz

Technical University of Applied Sciences Weiden ( email )

Hetzenrichter Weg 15
D-92637 Weiden i.d. Opf
Germany
(49) 961-382-1318 (Fax)

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