In summer 2011, elevated sovereign risk in Eurozone peripheral countries increased the solvency risk of Eurozone banks … public funds to increase their exposure to risky domestic debt, so that when solvency risk in the Eurozone worsened the run … of private short-term investors from Eurozone banks intensified. (ii) In contrast, ECB’s announcement of being a …

persistence of liquidity shocks. Following a theory of long-term interbank funding a financial system which is modeled as a micro … policy and therefore ultimately the real economy. In particular, it facilitates banks' liquidity management. This paper aims … at extending the literature which views interbank markets as mutual liquidity insurance mechanism by taking into account …

the initial shock; and (iii) central bank asset purchases and long-term refinancing operations can be effective …