IDEAS home Printed from https://ideas.repec.org/a/mnb/finrev/v23y2024i1p76-105.html

Payment Liquidity in the Light of Changes in the Central Bank Toolkit

Author

Listed:
  • Adrian Kollar

    (Magyar Nemzeti Bank)

Abstract

This study examines the impact of the changes implemented by the Magyar Nemzeti Bank in the central bank toolkit on the liquidity of payment system1 participants over the period between 2020 and the end of 2023 H2. In response to the economic challenges of recent years, the central bank toolkit changed significantly during the period under review. While the economic and financial crisis stemming from the Covid-19 pandemic required interbank liquidity expansion measures, in 2022 steps to absorb excess liquidity were necessary to fine-tune monetary transmission and achieve and maintain price stability. The analysis focuses on the impact of specific toolkit adjustments on the liquidity of the payment system, while also demonstrating why interbank liquidity is separated from payment system liquidity, and which toolkit modifications have typically had a significant impact on the liquidity of the payment system.

Suggested Citation

  • Adrian Kollar, 2024. "Payment Liquidity in the Light of Changes in the Central Bank Toolkit," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 23(1), pages 76-105.
    • Handle: RePEc:mnb:finrev:v:23:y:2024:i:1:p:76-105
    as

    Download full text from publisher

    File URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-23-1-st3-kollar.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Simon T Gray, 2006. "Central bank management of surplus liquidity," Lectures, Centre for Central Banking Studies, Bank of England, edition 1, number 6, April.
    2. Nikolaou, Kleopatra, 2009. "Liquidity (risk) concepts: definitions and interactions," Working Paper Series 1008, European Central Bank.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:fip:fedhep:y:2013:i:qii:p:30-46:n:vol.37no.2 is not listed on IDEAS
    2. Jonathan Fullwood & Daniele Massacci, 2018. "Liquidity resilience in the UK gilt futures market: evidence from the order book," Bank of England working papers 744, Bank of England.
    3. Leow, Maggi, 2026. "The Determinants of Financial Risk Performance of Target Corporation In United States," MPRA Paper 127634, University Library of Munich, Germany.
    4. Adam Gersl & Zlatuse Komarkova & Lubos Komarek, 2016. "Liquidity Stress Testing with Second-Round Effects: Application to the Czech Banking Sector," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 66(1), pages 32-49, February.
    5. Jeff W. Huther & Jane E. Ihrig & Elizabeth C. Klee, 2017. "The Federal Reserve's Portfolio and its Effect on Interest Rates," Finance and Economics Discussion Series 2017-075, Board of Governors of the Federal Reserve System (U.S.).
    6. Ilhyock Shim & Goetz Von Peter, 2007. "Distress Selling and Asset Market Feedback," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 16(5), pages 243-291, December.
    7. Monzer Kahf & Cherin Hamadi, 2014. "An Attempt to Develop Sharīʿah Compliant Liquidity Management Instruments for the Financier of Last Resort: With Reference to Qatar Development Plan," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 22, pages 109-138.
    8. Eli Direye & Tarron Khemraj, 2022. "Central bank securities and foreign exchange market intervention in a developing economy," Review of Development Economics, Wiley Blackwell, vol. 26(1), pages 280-297, February.
    9. Tatiana Grishina & Alexey Ponomarenko, 2023. "Banks’ interest rate setting and transitions between liquidity surplus and deficit," SN Business & Economics, Springer, vol. 3(12), pages 1-18, December.
    10. Axel Löffler & Gunther Schnabl & Franziska Schobert, 2013. "Limits of Monetary Policy Autonomy and Exchange Rate Flexibility by East Asian Central Banks," Global Financial Markets Working Paper Series 48-2013, Friedrich-Schiller-University Jena.
    11. J�rôme Vandenbussche & Szabolcs Blazsek & Stanley Watt, 2012. "The liquidity and liquidity distribution effects in emerging markets: evidence from Jordan," Applied Financial Economics, Taylor & Francis Journals, vol. 22(3), pages 231-242, February.
    12. Ragnheiður Jónsdóttir, 2019. "The Central Bank of Iceland's liquidity management system," Economics wp79, Department of Economics, Central bank of Iceland.
    13. Buschmann, Christian & Schmaltz, Christian, 2017. "Sovereign collateral as a Trojan Horse: Why do we need an LCR+," Journal of Financial Stability, Elsevier, vol. 33(C), pages 311-330.
    14. Hafiz Waqas Kamran & Dr. Shamsul Bahrain bin Mohamed Arshad & Dr. Abdelnaser Omran, 2019. "Liquidity Risk Management in Banking Sector under the Shadow of Systematic Risk and Economic Dynamics in Pakistan," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 7(2), pages :167-183, June.
    15. Winnie Wambui Mwangi & Dr Joshua Bosire Ong'era & Dr Joshua Matanda, 2022. "Financial Risk And Financial Performance Of Commercial Banks Listed In The Nairobi Securities Exchange In Kenya," International Journal of Finance and Accounting, IPRJB, vol. 7(4), pages 1-17.
    16. Direye, Eli & Khemraj, Tarron, 2021. "Central bank securities and FX market intervention in a developing economy," MPRA Paper 111533, University Library of Munich, Germany, revised 09 Aug 2021.
    17. Hertrich, Markus, 2015. "Does Credit Risk Impact Liquidity Risk? Evidence from Credit Default Swap Markets," MPRA Paper 67837, University Library of Munich, Germany.
    18. Keyra Primus, 2013. "'Excess Reserves, Monetary Policy and Financial Volatility," Centre for Growth and Business Cycle Research Discussion Paper Series 183, Economics, The University of Manchester.
    19. Monostori, Zoltan, 2012. "Magyar szuverén fix kamatozású forintkötvények hozamdekompozíciója [Decomposition of the five-year Hungarian sovereign fixed income forint yields]," MPRA Paper 54253, University Library of Munich, Germany, revised Sep 2012.
    20. repec:ers:journl:v:vi:y:2018:i:2:p:39-55 is not listed on IDEAS
    21. Sanvi Avouyi-Dovi & Julien Idier., 2010. "Central bank liquidity and market liquidity: the role of collateral provision on the French government debt securities market," Working papers 278, Banque de France.
    22. Sekoni, Abiola, 2015. "The Basic Concepts and Feature of Bank Liquidity and Its Risk," MPRA Paper 67389, University Library of Munich, Germany.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mnb:finrev:v:23:y:2024:i:1:p:76-105. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Morvay Endre The email address of this maintainer does not seem to be valid anymore. Please ask Morvay Endre to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/mnbgvhu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.