Central Bank Balances and Reserve Requirements
By Simon T Gray. Social Science Research Network, 2011
143 citations recorded by the source corpus.
Most central banks oblige depository institutions to hold minimum reserves against their liabilities, predominantly in the form of balances at the central bank. The role of these reserve requirements has evolved significantly over time. The overlay of changing purposes and practices has the result that it is not always fully clear what the current purpose of reserve requirements is, and this necessarily complicates thinking about how a reserve regime should be structured. This paper describes three main purposes for reserve requirements - prudential, monetary control and liquidity management - and suggests best practice for the structure of a reserves regime. Finally, the paper illustrates current practices using a 2010 IMF survey of 121 central banks.
View Paper: https://www.semanticscholar.org/paper/28686282f2898922bb42b1741c6a8bd6151daba7
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Citations in the corpus
- Regulatory arbitrage in action: evidence from banking flows and macroprudential policy (2015, background): “Gray (2011) provides background on the changing use and purposes of reserve requirements.”
- Fostering green investments and tackling climate-related financial risks: Which role for macroprudential policies? (2019, unknown): “Consequently, using them to directly subsidize credit for green investments can hinder liquidity management, thus bringing to a suboptimal outcome (Gray, 2011).”
- Macroprudential Policies and Housing Prices-A New Database and Empirical Evidence for Central, Eastern, and Southeastern Europe (2012, background): “Igan and Kang (2011) find that the adoption of maximum loan-to-value (LTV) and debt-service-to-income (DTI) ratios in Korea in the second half of the 2000s was successful in slowing down housing price inflation and the growth of transaction volumes.”
- Reserve Requirements for Price and Financial Stability - When are They Effective? (2012, methodology): “Second, we analyze the role of specific shocks.”
- Macroprudential Policy: What Instruments and How to Use Them? Lessons from Country Experiences (2011, background): “56For a recent survey of country experiences with reserve requirements more generally, see Gray (2011).”