This paper discusses commercial banks’ demand for central bank reserves under two alternative monetary policy framework configurations, namely: (i) an interest rate corridor system with scarce liquidity, and (ii) a floor system with ample liquidity. It outlines the interaction between the...

This paper discusses commercial banks’ demand for central bank reserves under two alternative monetary policy framework configurations, namely: (i) an interest rate corridor system with scarce liquidity, and (ii) a floor system with ample liquidity. It outlines the interaction between the...

This paper is concerned with international reserves where the accumulation of reserves is financed by public debt. Optimally controlled paths are used to illustrate the possibility of long term instability in a small macroeconomic system. The results indicate that reserve accumulation financed...

When the Federal Reserve first started to pay interest on excess reserves in October 2008, it presented a choice that banks had not previously faced. That is, they could invest bank capital in excess reserves and earn the "better than" risk free rate or they could lend and earn a higher but...

Classical claims reserving methods act on so-called claims reserving triangles which are aggregated insurance portfolios. A crucial assumption in classical claims reserving is that these aggregated portfolios are sufficiently homogeneous so that a coarse reserving algorithm can be applied. We...

Banks have a private motive to hold some level of cash and liquid reserves, but the negative externalities of bank runs create a public interest in setting a regulatory level higher than the privately optimal level. We can think of such reserve requirements (RRs) as the original form of...

After the collapse of Lehman Brothers in September 2008, deposits began to accumulate at large Brazilian banks, representing a flight to safety away from small and medium-sized banks. While total deposits in the Brazilian financial system grew by 13% from August 2008 to January 2009, the total...

After China devalued the renminbi against the US dollar in August 2015, Chinese equity markets experienced a significant drop that spilled into international markets. The People’s Bank of China (PBOC) adjusted the reserve requirement ratio (RRR) five times between February 2015 and October...

The devaluation of the Mexican peso in December 1994 sparked concerns about the quality and safety of government debt across Latin American countries, including Argentina. In late 1994 and 1995, Banco Central de la Republica Argentina (BCRA) implemented three changes in reserve requirement...