publication . Article . 2010

Introducing optional reserve ratios in Hungary

Lóránt Varga;
Open Access
  • Published: 01 Jan 2010 Journal: MNB Bulletin, volume 5, issue 3 October, pages 57-66
As of the reserve maintenance period commencing in November 2010, Hungarian credit institutions will be free to decide whether to apply the previously valid 2% reserve ratio, or to apply a higher mandatory reserve ratio. Credit institutions required to hold reserves may select from reserve ratios of 2, 3, 4 and 5%, and may change their decision on a semi-annual basis. In line with the international best practice, the purpose of the MNB’s reserve requirement system is to support credit institutions' liquidity management by the monthly averaging mechanism and to thereby contribute to narrowing the gap between short-term interbank rates and the central bank central...
free text keywords: reserve requirements, reserve ratio, money supply, money multiplier, liquidity, financial crisis, interbank market, jel:E42, jel:E51, jel:E58, jel:G21
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