Working Paper No. 669

The Interplay between Money Market Development and Changes in Monetary Policy Operations in Small European Countries, 1980–2000

Published: September 22, 2006Pages: 53Keywords: Monetary policy operations; Money market; European Union; Deregulation JEL-codes: E52; E58; G28; N24

The Interplay between Money Market Development and Changes in Monetary Policy Operations in Small European Countries, 1980–2000 Jens Forssbæck and Lars Oxelheim


We study the interplay between money market development and changes in monetary policy operating procedures in 11 European countries from c. 1980 up to the launch of EMU. Aspects of money market development such as the size and structure of different market segments, and institutional and regulatory changes, are addressed. We recount and empirically examine the extent of reorientation of monetary policy instruments away from quantitative direct control instruments toward indirect market-based instruments. The process of financial deregulation is uniform across the countries. The path of money market development varies substantially, whereas changes in central bank instruments show both similarities and differences. We hypothesise a relationship between the two processes and provide tentative evidence.

 

Lars Oxelheim

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Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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