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Changes to liquidity management regime

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  • Ian Nield

    (Reserve Bank of New Zealand)

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    Abstract

    In July 2006, the Reserve Bank commenced implementation of changes to its liquidity management regime. Under the existing regime, there had been increasing evidence of insufficient liquidity in the banking system at various times and some inefficiencies in the way in which it was provided. Under the new regime, there has been a significant increase in the level of cash left in the payment system overnight. This article details the motivation for the changes and the key features of the new regime and provides some initial observations of their impact. The article notes that the implementation of the new regime, which occurred over a four-month period, has been largely uneventful and that there have been few signs of stress since the Reserve Bank liquefied the system.

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    File URL: http://www.rbnz.govt.nz/research_and_publications/reserve_bank_bulletin/2006/2006dec69_4nield.pdf
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    Bibliographic Info

    Article provided by Reserve Bank of New Zealand in its journal Reserve Bank of New Zealand Bulletin.

    Volume (Year): 69 (2006)
    Issue (Month): (December)
    Pages: 6p

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    Handle: RePEc:nzb:nzbbul:december2006:5

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    1. Anonymous, 1999. "Monetary policy implementation: changes to operating procedures," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 62, March.
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    Cited by:
    1. Guender, Alfred V. & Rimer, Oyvinn, 2008. "The implementation of monetary policy in New Zealand: What factors affect the 90-day bank bill rate?," The North American Journal of Economics and Finance, Elsevier, vol. 19(2), pages 215-234, August.
    2. Kevin Hoskin & Ian Nield & Jeremy Richardson, 2009. "The Reserve Bank's new liquidity policy for banks," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 72, pages 5-18, December.

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