EFFECTIVENESS OF ZERO LOWER BOUND POLICY IN EUROPEAN FINANCIAL MARKETS

The paper examines new circumstances in European financial markets, with special amplify on unconventional measures of monetary policies. After the effective implementation of different kinds of quantitative and qualitative easing in US market, ECB and other European central banks try to boost domestic economy and aggregate demand with lowering their major reference rate at zero level. Additional, number of major central banks in Europe have set key policy rates at negative levels in order to further encourage lending by making it costly for banks to hold excess reserves at their central banks. Amid negative policy rates, nominal yields on some bonds of highly-rated European governments have also dropped below zero. This paper quantifies the impact of the most important ECB's non-standard monetary policy measures on asset prices in the euro area and globally, with effectiveness of Zero Lower Bound policy - ZLB on transmission channel to asset markets, including a portfolio balance channel and different risk channels. After the first package of measures, ECB decided to intensify asset repurchase program, with bigger scale of money liquidity and structure of purchasable financial instruments.