In global financial centers, short-term market rates are effectively determined in the pledged collateral market, where banks and other financial institutions exchange collateral (such as bonds and equities) for money. Furthermore, the use of long-dated securities as collateral for short...

This paper outlines important lessons for monetary policy. In particular, the role of inflation targeting, which was much acclaimed prior to the financial crisis and since then has not lost much of its endorsement, is critically reviewed. Ignoring the relation between monetary policy and asset...

Central bank collateral policies came under pressure with the 2007-08 financial market crisis. This paper addresses the rationale for and constraints in taking collateral, and recent practices in different collateral frameworks. It then considers the risks of adverse selection. The paper...

The global financial crisis (GFC) has renewed interest in emergency liquidity support (sometimes referred to as 'Lender of Last Resort') provided by central banks to financial institutions and challenged the traditional way of conducting these operations. Despite a vast literature on the topic,...

The paper discusses the reasons for central bank (CB) issuance of securities, and reasons for choosing different approaches e.g. in maturities and target market. It provides evidence on the range of different approaches taken by those CBs which do issue, as well as suggesting reasons why some...

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...