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ECB's Schnabel flags role of shadow banks in passing on policy - Metro US

ECB’s Schnabel flags role of shadow banks in passing on policy

29th Frankfurt European Banking Congress (EBC) takes place in Frankfurt

FRANKFURT (Reuters) – The European Central Bank should keep a close watch on the growing role played by shadow banks in passing on the ECB’s policy to money markets, as many of those firms do not have access to central bank cash, ECB board member Isabel Schnabel said on Monday.

“Unlike banks, these market participants often do not have access to central bank operations,” Schnabel said.

“Were the transmission across money market rates to weaken, or rates to decouple from policy intentions, this could have implications for monetary policy implementation in the future,” she said.

(Reporting By Francesco Canepa)

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