Access policy and money market segmentation

Sébastien Philippe Kraenzlin and Thomas Nellen

Issue
2012-12

Pages
32

JEL classification
E58, G21, G28

Keywords
access to central bank money, unsecured interbank money market, money market integration and segmentation, financialcrisis

Year
2012

We analyse deviations between interest rates paid in the Swiss franc unsecured money market and the respective Libor rate. First, banks that have access to the secured interbank market and the SNB's monetary policy operations pay less than banks without access. Second, domestically unchartered, foreign banks pay more than domestic banks. We find that these segmentations are limited both during normal times and during the financial crisis starting 2007 thanks to open access to the secured interbank market and the SNB's monetary policy operations. These findings reveal that a neglected aspect of monetary policy implementation matters, namely access policy.