Working Paper

Transmission of Quantitative Easing: The Role of Central Bank Reserves

Abstract: In August 2011, the Swiss National Bank engaged in unconventional monetary policy through an unprecedented expansion of bank reserves. As these actions did not involve any outright long-term asset purchases, this unique episode allows for novel insights on the transmission mechanism of central bank balance sheet expansions to interest rates. Analysis of the response of Swiss bond yields to announcements regarding this program suggests that expansion of reserves by itself can lower long-term yields through a portfolio balance effect.

JEL Classification: E43; E52; E58; G12;

https://doi.org/10.24148/wp2014-18

Bibliographic Information

Provider: Federal Reserve Bank of San Francisco

Part of Series: Working Paper Series

Publication Date: 2016-06-20

Number: 2014-18

Pages: 46 pages