The European Central Bank published its Euro money market study 2024, reporting that average daily turnover in the euro money market increased by 38% to EUR 1.8 trillion between end-2022 and end-2024. The study finds that money market rates immediately and fully reflected the ECB’s rate hikes up to September 2023 and subsequent cuts starting in June 2024, supporting the deposit facility rate’s role as the key steering rate for the monetary policy stance. Turnover growth is attributed mainly to banks adapting to declining excess liquidity by trading more in money markets and to changes in policy rates that influenced the yield curve. Secured and foreign exchange swap transactions accounted for more than half of total turnover and outstanding amounts, while the overnight index swap segment saw the most significant growth, including activity linked to policy rate expectations. Trading in both secured and unsecured segments remained concentrated in very short-term tenors such as overnight, spot/next and tomorrow/next, with non-banks the most active counterparties. Bilateral trading among euro area banks represented a modest share of each segment at end-2024, at 17% for unsecured and 26% for foreign exchange swaps, while secured trading with public institutions rose to almost EUR 70bn from EUR 10bn versus 2021–2022 following the reduction in remuneration of non-monetary policy deposits effective 1 May 2023. Rates broadly converged towards the deposit facility rate to varying degrees, alongside a persistent positive spread between secured and unsecured overnight rates and low sensitivity of €STR to reductions in excess liquidity. The next euro money market study is scheduled for publication in the second quarter of 2027 and will expand the analysis to trades from 69 banks, up from 45 banks in the 2024 study, reflecting the increased number of money market statistical reporting agents.
European Central Bank 2025-04-30
European Central Bank publishes Euro money market study showing 38% turnover rise to EUR 1.8 trillion and efficient pass-through of deposit facility rate changes
The European Central Bank's Euro money market study 2024 reports a 38% increase in average daily turnover to EUR 1.8 trillion from end-2022 to end-2024, driven by banks adapting to declining excess liquidity and policy rate changes. Money market rates fully reflected ECB rate adjustments, with secured and foreign exchange swap transactions comprising over half of total turnover. Trading remained concentrated in short-term tenors, with non-banks as active counterparties, and secured trading with public institutions rose significantly following changes in deposit remuneration.