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stock market crashes, bank fails and other setbacks that endanger the yield of illiquid savings. In turbulent times, the … insurance motive to save money increases total savings by replacing deposit saving more than one-to-one. The share of deposit … savings depends positively on the expected interest rate, while the share of cash savings is the higher the less there is …
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Canada's Large Value Transfer System (LVTS) is in the process of being replaced by a real-time gross settlement (RTGS) system. A pure RTGS system typically requires participants to hold large amounts of intraday liquidity in order to settle their payment obligations. Implementing one or more...
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A surge in banks' liquidity needs increases settlement costs that could burden the functioning of the real economy through its impact on banks' lending behavior. A liquidity-saving mechanism (LSM) can help reduce banks' liquidity needs, but it could also affect banks' strategic behavior. To...
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Does the level of deposits matter for bank fragility and efficiency? In a banking model with endogenous bank runs and a consumption-saving decision, we show that the level of deposits has opposite effects on bank fragility depending on the nature of bank runs. In an economy with panic-driven...
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