Publication

This report explores the importance of financial structures for the convergence of monetary transmission in Europe, an issue that arose in the late 1990s. The authors test the importance of financial structure and their impact on the effects of monetary policy. They find convergence in banks' reaction to money market movements, which is reduced in groups of countries with similar financial structure. They also show the impact of financial structures on the extent of monetary transmission impulses in the same month. They conclude that differences in financial structures between countries must not be ignored when considering convergence of monetary policy in Europe.