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| Author: | Neyer, U. |
| Title: | Interest on reserves and the flexibility of monetary policy in the euro area |
| Journal: | Scandinavian Journal of Economics
2009 : VOL. 111:2, p. 417-438 |
| Index terms: | bank reserves central banks Euro flexibility monetary policy |
| Language: | eng |
| Abstract: | It is shown here that remunerating required reserves can increase the flexibility of monetary policy. The remuneration at the current policy rate implies constant net marginal interest costs interest costs of holding required reserves. This allows central bank to change the policy rate also within a reserve maintenance period without inducing a problematic reserve shifting on behalf of the banks. In the euro area, required reserves are remunerated at an average rate. In the euro area, required reserves are remunerated at an average rate. |
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