The European Central Bank published an ECB Working Paper analysing secured money market transactions reported in its Money Market Statistical Reporting database for the 47 largest euro area banks. The paper documents how the Liquidity Coverage Ratio (LCR) and the post-crisis shift from unsecured to secured funding are associated with changes in repo activity, collateral use and the structure of interbank connections. Using transaction-level data from July 2016 to December 2022, the authors find that evergreen repurchase agreements increased sharply after the LCR’s introduction, with volumes rising from negligible levels in 2017 to about 10 billion per day in 2019. Collateral re-use is estimated at around 1, in line with prior European evidence. Network analysis of secured exposures shows high stability over time, alongside higher density (around 10% to 20% depending on the aggregation window) and more symmetric in-degree and out-degree patterns than typically reported for unsecured interbank markets.
European Central Bank 2025-09-17
European Central Bank working paper links Liquidity Coverage Ratio to a surge in evergreen repos and a denser secured interbank network
The European Central Bank's Working Paper analyzes secured money market transactions for the 47 largest euro area banks, highlighting the Liquidity Coverage Ratio's (LCR) impact and the shift from unsecured to secured funding on repo activity and interbank connections. Using data from July 2016 to December 2022, the study notes a significant rise in evergreen repurchase agreements post-LCR introduction and stable, dense network patterns in secured exposures. Collateral re-use aligns with previous European findings.