Transmission of Quantitative Easing: The Role of Central Bank Reserves

By Jens H. E. Christensen, Signe Krogstrup. Economic Journal, 2016

113 citations recorded by the source corpus.

We argue that the issuance of central bank reserves per se can matter for the effectof central bank large-scale asset purchases-commonly known as quantitative easing- on long-term interest rates. This effect is independent of the assets purchased, and runs through a reserve-induced portfolio balance channel. For evidence we analyze the reaction of Swiss long-term government bond yields to announcements by the Swiss National Bank to expand central bank reserves without acquiring any long-lived securities. We find that declines in long-term yields following the announcements mainly reflected reduced term premiums suggestive of reserve-induced portfolio balance effects.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/7ca426e62eadab62ca070ee599a6383f3f22d5a5

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Citations in the corpus

The international transmission of monetary policy (2018, background): “…characteristics that we might most closely want to examine relate to banks’ existing asset holdings: the share of cross-border assets, the relative share of securities holdings and lending, and the relative share of lending to banks and real economy borrowers (Christensen and Krogstrup 2016).”