Do Non-Banks Need Access to the Lender of Last Resort? | “The Next Financial Crisis?”

The presentation offers a rigorous empirical analysis of a timely and important policy question. The use of granular daily data and a difference-in-differences design allows for credible identification of the effects of ECB interventions. The authors carefully control for confounding factors, such as Fed interventions, and conduct robustness checks. The findings are economically significant: the PEPP announcement led to a 3.6 percentage point performance gap and a 62% relative improvement in net flows for funds with higher eligible holdings. The analysis of the indirect channel via repo markets is also valuable, showing that bank liquidity provision did not reach funds, highlighting a potential gap in the transmission mechanism. The discussants provide insightful comments, questioning the external validity and the policy implications. However, the presentation is a conference talk, so the results are preliminary and not yet peer-reviewed. The focus on the euro area may limit generalizability, and the paper does not fully address the moral hazard implications of providing lender of last resort access to non-banks. Overall, the video is a high-quality academic presentation with strong empirical evidence, but it is not a comprehensive review of the literature. The title accurately reflects the content, and the session is well-structured.

The title accurately reflects the core research question and the context of the conference session.

8/10

The presentation is based on rigorous empirical research using granular daily data and a difference-in-differences methodology. The authors are ECB researchers, and the discussants are prominent academics. However, the video is a conference presentation, not a peer-reviewed publication, and the findings are preliminary.

Markers derived by PSI from the transcript: the creator did not define chapters.

• 00:00Introduction and context: non-banks account for 60% of financial sector assets in the euro area.
• 02:00March 2020 liquidity crisis: unprecedented outflows from bond mutual funds, 150 billion euros withdrawn.
• 05:00Repo market dry-up: bank cash lending to funds dropped by 50%.
• 10:00Research design: using the crisis as a laboratory to assess ECB interventions (PEPP and LTROs).
• 15:00Direct interventions: PEPP announcement effects on fund performance and flows, with a 3.6 percentage point gap.
• 20:00Role of PEPP flexibility: funds exposed to more indebted countries benefited more.
• 25:00Controlling for Fed interventions: PEPP effects remain strong, but Fed actions also matter.
• 30:00Indirect interventions: bridge LTROs did not lead to increased bank repo lending to funds.
• 35:00Policy implications: potential need for lender of last resort for non-banks, but also ex-ante regulation.
• 40:00Discussant comments and Q&A session.

• ECB Annual Research Conference 2025 programme — Official conference programme providing details on the session and paper.
• Playlist of other sessions from the 2025 ECB Annual Research Conference — YouTube playlist containing other sessions from the conference.

• Falato, A., Goldstein, I., & Hortaçsu, A. (2021). Financial fragility in the COVID-19 crisis: The case of investment funds in corporate bond markets. Journal of Monetary Economics — Documents similar outflows and fire sales in US corporate bond mutual funds during March 2020, consistent with the euro area evidence.

• Acharya, V. V., & Steffen, S. (2020). The risk of being a fallen angel and the corporate bond and loan market in the COVID-19 crisis. VoxEU