Isabel Schnabel: Shifting tides in euro area money markets - from the global financial crisis to the COVID-19 pandemic

Speech by Ms Isabel Schnabel, Member of the Executive Board of the European Central Bank, at the ECB Conference on Money Markets, Frankfurt am Main, 23 November 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
25 November 2020

The graphs can be found on the ECB's website.

I would like to welcome you warmly to our virtual ECB Conference on Money Markets.

This conference offers an excellent platform to facilitate the exchange between academic experts on money markets and policy makers. The conference papers address some of the most topical research questions with respect to money markets and will thus provide valuable input for the implementation of our monetary policy.

Money markets are a cornerstone of the financial system. Banks, non-bank financial institutions and non-financial corporations all rely on money markets for their short-term funding, liquidity management and collateral needs. As a result, dislocations in money markets can severely undermine the stability of our financial system.

Due to their central role as a source of short-term funding, money markets are also crucial for the implementation and transmission of our monetary policy. Money market rates serve as operational targets for central banks and also as benchmarks for the pricing of credit, thereby directly affecting financing conditions in the real economy. To ensure a smooth transmission of monetary policy to the real economy, it is therefore crucial that money market rates are well-aligned with central banks' policy intentions.