Shadow banking increases need for asset purchases – ECB paper

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Asset purchase programmes may be more effective monetary policy tools in economies with large non-bank financial sectors, says a European Central Bank working paper.

In Unconventional monetary policy and funding liquidity risk, Adrien d’Avernas, Quentin Vandeweyer and Matthieu Darracq Pariès study how shadow banks affect the transmission of monetary policy to asset prices.

Providing liquidity to an impaired money market includes, first, using the discount window and liquidity injection

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