Navigating Uncharted Waters:Analysis of Monetary Operations & Financial Market Developments

In 2014, monetary policy announcements by global central banks continued to be a driver of financial markets. Developments in the European periphery and across emerging markets also continued to be a focus for market participants but to a lesser extent than in previous years. In this article, we review 2014 and early 2015, examining the evolution of Eurosystem liquidity provision and the subsequent impact on excess liquidity. The article also analyses the main changes to the Eurosystem’s operational framework over this period, including the introduction of the Targeted Longer Term Refinancing Operations (TLTROs), the Asset Backed Securities Purchase Programme (ABSPP), the Covered Bond Purchase Programme (CBPP3), and the Public Sector Purchase Programme (PSPP). The article reports on the continued improvements in money markets over the review period. Finally, we examine the on-going improvement in the Irish sovereign’s access to debt markets before briefly analysing changes in TARGET2 balances over 2014.