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Pré-Publication, Document De Travail Année : 2022

A Tiering Rule to Balance the Impact of Negative Policy Rates on Banks

Mattia Girotti
  • Fonction : Auteur
Benoît Nguyen
  • Fonction : Auteur
Jean-Guillaume Sahuc
  • Fonction : Auteur
  • PersonId : 1020258

Résumé

Negative interest rate policy makes excess liquidity costly to hold for banks and this may weaken the bank-based transmission of monetary policy. We design a rule-based tiering system for excess reserve remuneration that reduces the burden of negative rates on banks while ensuring that the central bank keeps control of interbank interest rates. Using euro-area data, we show that under the proposed tiering system, the aggregate cost of holding excess liquidity when the COVID-19 monetary stimulus fully unfolds would be more than 36% lower than that under the ECB’s current system.
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Dates et versions

hal-04159818 , version 1 (12-07-2023)

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  • HAL Id : hal-04159818 , version 1

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Mattia Girotti, Benoît Nguyen, Jean-Guillaume Sahuc. A Tiering Rule to Balance the Impact of Negative Policy Rates on Banks. 2022. ⟨hal-04159818⟩
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