Ulrich Bindseil
- Published in print:
- 2014
- Published Online:
- October 2014
- ISBN:
- 9780198716907
- eISBN:
- 9780191785559
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198716907.003.0014
- Subject:
- Economics and Finance, Macro- and Monetary Economics
During the financial crisis, central banks have made various changes to their standing facilities and open market operations. First, most central banks of large advanced monetary areas switched from ...
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During the financial crisis, central banks have made various changes to their standing facilities and open market operations. First, most central banks of large advanced monetary areas switched from a symmetric corridor approach to one in which the short-term interest rate is pegged to the remuneration rate of excess reserves (e.g. in the form of a deposit facility). Excess reserves dominated the money market mostly because of large-scale asset purchase programmes. The various reasons for central bank outright purchase programmes in a financial crisis are reviewed. Central banks also made more convenient their open market credit operations, namely by extending maturity and switching from auctions to so-called fixed-rate full allotment procedures.Less
During the financial crisis, central banks have made various changes to their standing facilities and open market operations. First, most central banks of large advanced monetary areas switched from a symmetric corridor approach to one in which the short-term interest rate is pegged to the remuneration rate of excess reserves (e.g. in the form of a deposit facility). Excess reserves dominated the money market mostly because of large-scale asset purchase programmes. The various reasons for central bank outright purchase programmes in a financial crisis are reviewed. Central banks also made more convenient their open market credit operations, namely by extending maturity and switching from auctions to so-called fixed-rate full allotment procedures.
