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Asymmetric Standing Facilities: An Unexploited Monetary Policy Tool

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  • Pérez-Quirós, Gabriel
  • Rodriguez Mendizabal, Hugo

Abstract

This paper analyzes the role of standing facilities in the determination of the demand for reserves in the overnight money market. In particular, we study how the asymmetric nature of the deposit and lending facilities could be used as a powerful policy tool for the simultaneous control of prices and quantities in the market for daily funds.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7789.

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Date of creation: Apr 2010
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Handle: RePEc:cpr:ceprdp:7789

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Related research

Keywords: fine tuning operations; Monetary policy implementation; overnight interest rates; standing facilities;

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References

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  1. Gabriel Pérez-Quirós & Hugo Rodríguez Mendizábal, 2003. "The Daily Market for Funds in Europe: What has Changed with the EMU?," Working Papers 22, Barcelona Graduate School of Economics.
  2. Ayuso, Juan & Repullo, Rafael, 2001. "Why did the banks overbid? An empirical model of the fixed rate tenders of the European Central Bank," Journal of International Money and Finance, Elsevier, Elsevier, vol. 20(6), pages 857-870, November.
  3. Hamilton, James D, 1996. "The Daily Market for Federal Funds," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 104(1), pages 26-56, February.
  4. Selva Demiralp & Erhan Artuç, 2007. "Discount Window Borrowing after 2003: The Explicit Reduction in Implicit Costs," Koç University-TUSIAD Economic Research Forum Working Papers, Koc University-TUSIAD Economic Research Forum 0708, Koc University-TUSIAD Economic Research Forum.
  5. Välimäki, Tuomas, 2008. "Why the effective price for money exceeds the policy rate in the ECB tenders?," Working Paper Series, European Central Bank 0981, European Central Bank.
  6. Linzert, Tobias & Schmidt, Sandra, 2007. "What Explains the Spread Between the Euro Overnight Rate and the ECB's Policy Rate?," ZEW Discussion Papers 07-076, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. Eisenschmidt, Jens & Tapking, Jens, 2009. "Liquidity risk premia in unsecured interbank money markets," Working Paper Series, European Central Bank 1025, European Central Bank.
  8. Ayuso, J. & Repullo, R., 2000. "A Model of the Open Market Operations of the European Central Bank," Papers, Centro de Estudios Monetarios Y Financieros- 0011, Centro de Estudios Monetarios Y Financieros-.
  9. Eisenschmidt, Jens & Hirsch, Astrid & Linzert, Tobias, 2009. "Bidding behaviour in the ECB’s main refinancing operations during the financial crisis," Working Paper Series, European Central Bank 1052, European Central Bank.
  10. Gaspar, Vítor & Pérez Quirós, Gabriel & Rodríguez Mendizábal, Hugo, 2008. "Interest rate dispersion and volatility in the market for daily funds," European Economic Review, Elsevier, vol. 52(3), pages 413-440, April.
  11. repec:fth:baesse:0105 is not listed on IDEAS
  12. Cassola, Nuno & Morana, Claudio, 2008. "Modelling short-term interest rate spreads in the euro money market," Working Paper Series, European Central Bank 0982, European Central Bank.
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Cited by:
  1. Ronald Heijmans & Lola Hern�ndez & Richard Heuver, 2013. "Determinants of the rate of the Dutch unsecured overnight money market," DNB Working Papers, Netherlands Central Bank, Research Department 374, Netherlands Central Bank, Research Department.

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