publication . Research . Preprint . 2004

Excess reserves and implementation of monetary policy of the ECB

Bindseil, Ulrich; Camba-Méndez, Gonzalo; Hirsch, Astrid; Weller, Benedict;
Open Access English
  • Published: 01 May 2004
  • Publisher: Frankfurt a. M.: European Central Bank (ECB)
This paper explains to what extent excess reserves are and should be relevant today in the implementation of monetary policy, focusing on the speci?c case of the operational framework of the Eurosystem. In particular, this paper studies the impact that changes to the operational framework for monetary policy implementation have on the level and volatility of excess reserves. A ‘transaction costs’ model that replicates the rather speci?c intra-reserve maintenance period pattern of excess reserves in the euro area is developed. Simulation results presented not only show that excess reserves may increase considerably under some changes to the operational framework,...
free text keywords: E52, E58, excess reserves, liquidity management, monetary policy implementation, excess reserves, liquidity management, monetary policy implementation, ddc:330

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