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The cost of reserves

  • Levy Yeyati, Eduardo

The cost of holding reserves is often estimated as the sovereign spread over the risk-free return on reserves paid on the debt issued to purchase them, which ignores the benign effect of reserves on the spread. This paper illustrates this numerically, showing that these costs, as typically measured, may have been considerably overstated.

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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 100 (2008)
Issue (Month): 1 (July)
Pages: 39-42

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Handle: RePEc:eee:ecolet:v:100:y:2008:i:1:p:39-42
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