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Akumulace devizových rezerv centrálních bank a dynamika absorpce likvidity bankovních systémů České republiky, Polska a Maďarska
[Central Bank´s Foreign Exchange Reserves Accumulation and Dynamics of Banking System Liquidity Absorption: The Case of the Czech Republic, Poland and Hungary]

Author

Listed:
  • Karel Brůna

Abstract

The paper deals with accumulation of foreign exchange reserves of central banks and its consequences in banking system liquidity management. In theoretical part the case of banking system liquidity surplus is analyzed focusing on creation of liquidity through FX operations, sterilization of liquidity and main sources of liquidity absorption. In this context it is analyzed how monetary policy instruments (on outright or repo basis) enable central bank to react on volatility of banking system liquidity needs and to cover issued currency in circulation and bank's reserves by net foreign assets. In empirical part these problems are analyzed and compared using the example of the Czech Republic, Poland and Hungary. The paper focuses on main differences in the level of liquidity surplus, cost of sterilization, volatility of spread between O/N reference interest rate and main policy rate, main sources of liquidity absorption and dynamics of currency in circulation and reserves covering by net foreign assets.

Suggested Citation

  • Karel Brůna, 2010. "Akumulace devizových rezerv centrálních bank a dynamika absorpce likvidity bankovních systémů České republiky, Polska a Maďarska [Central Bank´s Foreign Exchange Reserves Accumulation and Dynamics ," Politická ekonomie, Prague University of Economics and Business, vol. 2010(6), pages 723-746.
    • Handle: RePEc:prg:jnlpol:v:2010:y:2010:i:6:id:759:p:723-746
    DOI: 10.18267/j.polek.759
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    References listed on IDEAS

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    1. Martin Cincibuch & Tomáš Holub & Jaromír Hurník, 2009. "Central Bank Losses and Economic Convergence," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(3), pages 190-215, August.
    2. Alfred Broaddus & Marvin Goodfriend, 2001. "What assets should the Federal Reserve buy?," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 7-22.
    3. Mr. Peter Stella, 2002. "Central Bank Financial Strength, Transparency, and Policy Credibility," IMF Working Papers 2002/137, International Monetary Fund.
    4. Joe Ganley, 2004. "Surplus Liquidity: Implications for Central Banks," Lectures, Centre for Central Banking Studies, Bank of England, number 3, April.
    5. Mr. Alain Ize, 2005. "Capitalizing Central Banks: A Net Worth Approach," IMF Working Papers 2005/015, International Monetary Fund.
    6. Bindseil, Ulrich & Manzanares, Andrés & Weller, Benedict, 2004. "The role of central bank capital revisited," Working Paper Series 392, European Central Bank.
    7. Mr. Romain Ranciere & Mr. Olivier D Jeanne, 2006. "The Optimal Level of International Reserves for Emerging Market Countries: Formulas and Applications," IMF Working Papers 2006/229, International Monetary Fund.
    8. Beck, Roland & Rahbari, Ebrahim, 2008. "Optimal reserve composition in the presence of sudden stops: the euro and the dollar as safe haven currencies," Working Paper Series 916, European Central Bank.
    9. Beck, Roland & Rahbari, Ebrahim, 2011. "Optimal reserve composition in the presence of sudden stops," Journal of International Money and Finance, Elsevier, vol. 30(6), pages 1107-1127, October.
    10. Alain Ize, 2005. "Capitalizing Central Banks: A Net Worth Approach," IMF Staff Papers, Palgrave Macmillan, vol. 52(2), pages 289-310, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    open market operations; foreign reserves; liquidity; monetary policy implementation;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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