Banque de France paper says asset purchases may struggle to anchor rates
Research explores flooding markets with, or draining core banks of, liquidity
Research published by the Banque de France has examined ways in which the European Central Bank (ECB) could tackle volatility in interbank rates - including through asset purchases.
Implementing monetary policy in a fragmented monetary union by Miklos Vari suggests the eurozone has been experiencing a glut of liquidity as peripheral banks borrow from the central bank and core banks, awash with liquidity, cannot reduce their central bank borrowing below zero. "Large fluctuations" in this
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