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Overlapping Maturities of Central Bank Credits

Part of the Contributions to Economics book series (CE)

Abstract

In this chapter, we change the average rate model presented in the previous chapter by assuming that there are overlapping maturities of central bank credits. We will show that the overlapping maturities imply that central bank borrowing will deviate even more from the central bank’s benchmark amount and that even more required reserves will be postponed if the repo rate is cut. If the repo rate is raised, the overlapping maturities may imply that central bank borrowing deviates even more from the central bank’s benchmark amount and that even more required reserves are frontloaded. Furthermore, we will show that banks are affected differently by a monetary policy impulse if the repo rate is cut and that they may be affected differently if the repo rate is raised. Moreover, we will demonstrate that the overlapping maturities may prevent a smoothing of the interbank market rate.

Keywords

Central Bank Maintenance Period Monetary Authority Require Reserve Interbank Market 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Physica-Verlag Heidelberg 2007

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