The European Central Bank (ECB) has published its Euro Money Market Study 2024, revealing that daily turnover in the euro money market surged by 38% over a two-year period. From €1.3 trillion at the end of 2022, daily activity rose to €1.8 trillion by the end of 2024.
According to the ECB, the growth was driven primarily by two factors: a reduction in excess liquidity that pushed banks to increase their market participation, and monetary policy adjustments that reshaped the yield curve. The study also confirms that money market rates closely tracked changes in the ECB’s deposit facility rate, the primary tool used by the Governing Council to signal its monetary policy stance.
The report shows that secured transactions and foreign exchange (FX) swaps dominated the market, jointly accounting for more than half of the total turnover and outstanding volumes. The overnight index swap (OIS) segment, in particular, recorded the most significant increase in activity. Short-term maturities—such as overnight, spot/next, and tomorrow/next—were the most heavily traded, reflecting a preference for minimal risk exposure and high liquidity.
Bilateral activity between euro area banks remained modest. At the end of 2024, only 17% of unsecured transactions and 26% of FX swaps were executed bilaterally. However, there was a notable increase in secured trading with public institutions, which jumped from €10 billion to nearly €70 billion. This uptick followed changes in the remuneration policy for non-monetary policy deposits that took effect on 1 May 2023.
The ECB also noted that its interest rate hikes through September 2023, followed by rate cuts starting in June 2024, were quickly and fully reflected in money market pricing. Expectations surrounding these policy shifts drove particularly strong growth in OIS activity.
Money market rates generally aligned with the deposit facility rate, but a positive spread remained between secured and unsecured overnight rates. This was due to the €STR—the euro short-term rate—being relatively insensitive to reductions in excess liquidity.
Looking ahead, the ECB plans to expand the scope of its analysis in the next edition of the euro money market study, set for release in Q2 2027. That study will incorporate data from 69 reporting banks, up from 45 in the 2024 report, following a decision to broaden the money market statistical reporting base announced in April 2023.
