This paper investigates various theories explaining banks' overbidding in the fixed rate tenders of the European Central Bank (ECB). Using auction data from both the Bundesbank and the ECB, we show that none of the theories can on its own explain the observed overbidding. This implies that the...

Weekly repo auctions are the European Central Bank's most important policy instrument. Provided that banks bid seriously, these auctions should reveal useful information about banks' liquidity needs and the stance of monetary policy. However 1 as we show in this paper, the applied auction rules...

Weekly repo auctions are the European Central Bank's most important policy instrument. Provided that banks bid seriously, these auctions should determine the liquidity of the banking sector in an efficient and transparent way. However, under the fixed rate tender procedure used until June 2000,...

Weekly repo auctions are the European Central Bank's most important policy instrument. Provided that banks bid seriously, these auctions should determine the liquidity of the banking sector in an efficient and transparent way. However, under the fixed rate tender procedure used until June 2000,...

Weekly repo auctions are the European Central Bank's most important policy instrument. Provided that banks bid seriously, these auctions should reveal useful information about banks' liquidity needs and the stance of monetary policy. However 1 as we show in this paper, the applied auction rules...