In a floor system of monetary policy implementation, the central bank remunerates bank reserves at or near the market rate of interest. Some observers have expressed concern that operating such a system will have adverse fiscal consequences for the public sector and may even require the...

This paper describes segregated balance accounts (SBAs), a concept for a new type of account that could provide increased competition for deposits, reduce system-wide balance sheet costs, and improve the transmission of monetary policy by facilitating greater pass-through of interest on excess...

We develop a model in which financial intermediaries hold liquidity to protect themselves from shocks. Depending on parameter values, banks may choose to hold too much or too little liquidity on aggregate compared with the socially optimal amount. The model endogenously generates a situation of...

We offer a parsimonious model of the reserve demand to study the tradeoffs associated with various monetary policy implementation frameworks. Prior to the 2007-09 financial crisis, many central banks supplied scarce reserves to execute their interest-rate policies. In response to the crisis,...

We compare two stylized frameworks for the implementation of monetary policy. The first framework relies only on standing facilities, and the second one relies only on open market operations. We show that the Friedman rule cannot be implemented in the first framework, but can be implemented...

Methods of monetary policy implementation continue to change. The level of reserve supply - scarce, abundant, or somewhere in between - has implications for the efficiency and effectiveness of an implementation regime. The money market events of September 2019 highlight the need for an...

Methods of monetary policy implementation continue to change. The level of reserve supply - scarce, abundant, or somewhere in between - has implications for the efficiency and effectiveness of an implementation regime. The money market events of September 2019 highlight the need for an...

Methods of monetary policy implementation continue to change. The level of reserve supply-scarce, abundant, or somewhere in between-has implications for the efficiency and effectiveness of an implementation regime. The money market events of September 2019 highlight the need for an analytical...

In this paper, we consider the case for an intraday market for reserves. We discuss the separate roles of intraday and overnight reserves and argue that an intraday market could be organized in the same way as the overnight market. We present arguments for and against a market for intraday...

This paper develops a model of financial institutions that borrow short-term and invest in long-term marketable assets. Because these financial intermediaries perform maturity transformation, they are subject to runs. We endogenize the profits of an intermediary and derive distinct liquidity and...