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The SRD Requirement and Monetary Policy


  • Harper, Ian R


This paper considers the role of the statutory reserve deposit requirement as an instrument of monetary policy. It argues that the mere presence of the statutory reserve deposit requirement, and neither the value of the statutory reserve deposit ratio nor its variability over time, defines the significance of the statutory reserve deposit for monetary policy. A decision to abolish the statutory reserve deposit requirement may destabilize the demand for cash and complicate the task of the monetary authorities. Payment of interest on statutory reserve deposit accounts would serve to alleviate the distorting effect of the statutory reserve deposit requirement on the pattern of financial intermediation. Copyright 1988 by The Economic Society of Australia.

Suggested Citation

  • Harper, Ian R, 1988. "The SRD Requirement and Monetary Policy," The Economic Record, The Economic Society of Australia, vol. 64(186), pages 178-186, September.
  • Handle: RePEc:bla:ecorec:v:64:y:1988:i:186:p:178-86

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    References listed on IDEAS

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