THE ECB AND THE INTERBANK MARKET

We analyse the impact on the euro area economy of the ECBs non-standard monetary policy measures by studying the effect of the expansion of intermediation of interbank transactions across the central bank balance sheet. We exploit data drawn from the aggregated Monetary and Financial Institutions (MFI) balance sheet, which allow us to construct a measure of the policy shock represented by the ECBs increasing role as a financial intermediary. We find small but significant effects on both loans and real economic activity.