Working Paper: CEPR ID: DP818
Authors: Jacques Melitz
Abstract: The emergence of a single interbank market for reserves in the EC following monetary union raises a basic dilemma for policy. Either competition is allowed to decide the location of the interbank market and the national central banks will enter the competition, or the location of this market is decided collectively from the start, but a uniform blueprint of central banking must be adopted. The sources of this dilemma and its consequences are analysed in this paper.
Keywords: European Monetary Union; Central Banking; Money Market; Competition in Banking
JEL Codes: E42; G28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| national central banks adopt competitive strategies (E58) | interbank market concentration geographically (F65) |
| centralized model imposed (H77) | national central banks ability to compete diminished (E58) |
| national central banks ability to compete diminished (E58) | inefficiencies (D61) |
| national central banks compete for interbank market (E58) | interbank market location influenced by local banking needs and competitive strategies (F65) |