Carla Soares

Monetary Policy

Division: Monetary Policy Strategy
Current Position: Senior Economist
Fields of interest: Macroeconomics and Monetary Economics,Financial Economics
Email: carla_sofia.caeiro_soares@ecb.europa.eu

Biography

Education: 2010-2019
PhD in Economics, Nova School of Business and Economics, Lisboa; 2005-2008
MA in Monetary and Financial Economics, ISEG-UTL, Lisboa; 1998-2002
BA in Economics, ISCTE, Lisboa
Professional experience: 2022-
Senior economist, Monetary Policy Strategy Division, DG Monetary Policy, ECB; 2007-2022
Economist, Monetary Policy Division, Economic Research Department, Banco de Portugal; 2003-2007
Economist, Monetary Policy Division, Markets and Reserve Management Department, Banco de Portugal; 2005
Economist, Liquidity Analysis Division, Market Operations Directorate, ECB
Teaching experience: 2018-
Dissertation seminar, MA in Finance, Católica Lisbon School of Business and Economics

ECB publications

11 November 2022

WORKING PAPER SERIES - No. 2745

The augmented bank balance-sheet channel of monetary policy

English

Abstract: This paper studies how banks’ balance sheets and funding costs interact in the transmission of monetary-policy rates to banks’ credit supply to firms. To do so, we use credit registry data from Germany and Portugal together with the European Central Bank’s policy-rate cuts in mid-2014. The pass-through of the rate cuts to banks’ funding costs differs across the euro-area currency union because deposit rates vary in their distance to the zero lower bound (ZLB). When the distance is shorter, banks’ financing constraints matter less for the supply of credit and there is more risk taking. To rationalize these findings, we provide a simple model of an augmented bank balance-sheet channel where in addition to costly external financing, there is screening of borrowers and a ZLB on retail deposit rates. An impaired pass-through of monetary policy to banks’ funding costs reduces their ability to lever up and weakens their lending standards.
JEL Code: E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
E63 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Comparative or Joint Analysis of Fiscal and Monetary Policy, Stabilization, Treasury Policy
F45 : International Economics→Macroeconomic Aspects of International Trade and Finance
G20 : Financial Economics→Financial Institutions and Services→General
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages

21 September 2021

OCCASIONAL PAPER SERIES - No. 270

Non-bank financial intermediation in the euro area: implications for monetary policy transmission and key vulnerabilities

English

Abstract: The financing structure of the euro area economy has evolved since the global financial crisis with non-bank financial intermediation taking a more prominent role. This shift affects the transmission of monetary policy. Compared with banks, non-bank financial intermediaries are more responsive to monetary policy measures that influence longer-term interest rates, such as asset purchases. The increasing role of debt securities in the financing structure of firms also leads to a stronger transmission of long-rate shocks. At the same time, short-term policy rates remain an effective tool to steer economic outcomes in the euro area, which is still highly reliant on bank loans. Amid a low interest rate environment, the growth of market-based finance has been accompanied by increased credit, liquidity and duration risk in the non-bank sector. Interconnections in the financial system can amplify contagion and impair the smooth transmission of monetary policy in periods of market distress. The growing importance of non-bank financial intermediaries has implications for the functioning of financial market segments relevant for monetary policy transmission, in particular the money markets and the bond markets.
JEL Code: E4 : Macroeconomics and Monetary Economics→Money and Interest Rates
E5 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit
G2 : Financial Economics→Financial Institutions and Services
G38 : Financial Economics→Corporate Finance and Governance→Government Policy and Regulation

External publications

2021

Journal of Financial Intermediation

Surviving the perfect storm: the role of the Lender of Last Resort