Asymmetric Standing Facilities: An Unexploited Monetary Policy Tool

Quirós, Gabriel Pérez; Mendizábal, Hugo Rodríguez

doi:10.1057/imfer.2012.3

IMF Econ Rev

2012

DOI: 10.1057/imfer.2012.3

|View full text |Cite

Asymmetric Standing Facilities: An Unexploited Monetary Policy Tool

Gabriel Pérez Quirós¹,

Hugo Rodríguez Mendizábal

Help me understand this report

Search citation statements

Order By: Relevance

Paper Sections

Select...

Citation Types

Supporting

Mentioning

Contrasting

Year Published

2017

2024

Publication Types

Select...

Article5

Relationship

Self Cite0

Independent5

Authors

Journals

Cited by 6 publications

References 16 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

The effect of the central bank’s standing facilities on interbank lending and bank liquidity holding

Näther

2018

Econ Theory

View full text Add to dashboard Cite

How does the central bank influence interbank lending? The central bank's policy rates determine the attractiveness of the standing facilities compared with the interbank market. Therefore, by choosing the policy rates the central bank affects the number of banks using the standing facilities and the number of banks using the interbank market. There is also a second channel. The policy rates may influence bank liquidity holding and thus the chances that interbank lending occurs. To address both channels, bank liquidity holding is endogenous in the presented model. The results show that liquidity is not held to insure against idiosyncratic risk but to lend to the interbank market in case counterparty risk is not too high. If banks expect interbank lending to be sufficiently likely and profitable, a smooth liquidity transfer at the interbank market is guaranteed. The central bank can create such a situation under the constraint that counterparty risk is moderate and counterparty risk perceptions are not too distorted. If, however, counterparty risk is perceived to be too large, this may result in liquidity hoarding. KeywordsInterbank market • Liquidity holding • Standing facilities JEL Classification E43 • E58 • G21 The author would like to thank an anonymous referee, Diemo Dietrich, Uwe Vollmer, Harald Wiese, and the participants of the 8th RGS Doctoral Conference in Economics, the Doctoral Seminars at IWH and Leipzig University, and the Annual Congress 2015 of the Swiss Society of Economics and Statistics for helpful comments and suggestions, while retaining responsibility for all errors..

show abstract

The effect of the central bank’s standing facilities on interbank lending and bank liquidity holding

Näther

2018

Econ Theory

View full text Add to dashboard Cite

show abstract

Interest-bearing capital and monetary policy: a heterogeneous agent Marxian model

Qiao

2024

CPE

View full text Add to dashboard Cite

PurposeIn terms of understanding the new issues emerging in the practice of monetary policies and how to evaluate the latest theories of monetary policy, this paper proposes referring to Das Kapital and developing a monetary policy theory grounded in Marxist political economy.Design/methodology/approachBased on the discussion of interest-bearing capital in Das Kapital and using a heterogeneous agent model, this paper tries to explain the determining mechanism of interest rate, leverage ratio, and asset price.FindingsThe research finds that if there are differences in the techniques possessed by capital, the resulting disparities in production efficiency will lead to differences in profit rates and further influence the functional choices of capital in the movement of social total capital. Thus, with the formation of lending relationships, interest rates, leverage ratios, and asset prices will be endogenously determined simultaneously. Moreover, as the degree of technological diffusion influences the industrial capitalists’ willingness to take loans as well as the level of profit rates, there may be counter-cyclical changes in the returns on productive investment and financial investment at different stages of the technology life cycle, contributing to diverting funds out of the real economy. Besides, this paper discusses the challenges, tools, and goals of monetary policy within the credit money system.Originality/valueClarify the intrinsic mechanism of the functional differentiation of capital determined by heterogeneous technologies and exogenous capital-labor relation and analyze the impact of capital differentiation on the economy.

show abstract

What Powers for the Federal Reserve?

Feldstein

2010

Journal of Economic Literature

View full text Add to dashboard Cite

In this essay, I explain my reasons for the following policy recommendations: (1) The Fed should continue to manage monetary policy as it has in the past, should act as the nation's lender of last resort, should fully supervise the large bank holding companies and their subsidiary banks, and should be given resolution authority over the institutions that it supervises. (2) While a council of supervisors and regulators can play a useful role in dealing with macro prudential risks, it should not replace the central role of the Federal Reserve. (3) The virtually unlimited lending powers that the Fed has recently exercised in creating credit and helping individual institutions should be restricted in duration and subjected to formal Treasury approval backed by Congressional preauthorization of funds. (4) The Fed's capital rules for commercial banks need to be strengthened by replacing the existing risk-based capital approach with a broader definition of risk and the introduction of contingent capital. (5) Subjecting mortgage lending to a broader range of Federal Reserve regulations and allowing the Fed to deal with nonbank creators of mortgage products would be better than the creation of a new consumer financial protection organization. (JEL E52, E58, G21, G28)

show abstract

scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.

Contact Info

customersupport@researchsolutions.com

10624 S. Eastern Ave., Ste. A-614

Henderson, NV 89052, USA

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Blog Terms and Conditions API Terms Privacy Policy Contact Cookie Preferences Do Not Sell or Share My Personal Information

Made with 💙 for researchers

Part of the Research Solutions Family.

Asymmetric Standing Facilities: An Unexploited Monetary Policy Tool

Cited by 6 publications

References 16 publications

The effect of the central bank’s standing facilities on interbank lending and bank liquidity holding

The effect of the central bank’s standing facilities on interbank lending and bank liquidity holding

Interest-bearing capital and monetary policy: a heterogeneous agent Marxian model

What Powers for the Federal Reserve?

Contact Info

Product

Resources

About