Search Results

Showing results 1 to 10 of approximately 29.

(refine search)
SORT BY: PREVIOUS / NEXT
Author:Afonso, Gara 

Discussion Paper
How the Fed’s Overnight Reverse Repo Facility Works

Daily take-up at the overnight reverse repo (ON RRP) facility increased from less than $1 billion in early March 2021 to just under $2 trillion on December 31, 2021. In the second post in this series, we take a closer look at this important tool in the Federal Reserve’s monetary policy implementation framework and discuss the factors behind the recent increase in volume.
Liberty Street Economics , Paper 20220111

Working Paper
Monetary Policy Implementation With an Ample Supply of Reserves

Methods of monetary policy implementation continue to change. The level of reserve supply—scarce, abundant, or somewhere in between—has implications for the efficiency and effectiveness of an implementation regime. The money market events of September 2019 highlight the need for an analytical framework to better understand implementation regimes. We discuss major issues relevant to the choice of an implementation regime, using a parsimonious framework and drawing from the experience in the United States since the 2007-2009 financial crisis. We find that the optimal level of reserve supply ...
Working Paper Series , Paper WP 2020-02

Discussion Paper
Who’s Borrowing and Lending in the Fed Funds Market Today?

The Federal Open Market Committee (FOMC) communicates the stance of monetary policy through a target range for the federal funds rate, which is the rate set in the market for uncollateralized short-term lending and borrowing of central bank reserves in the U.S. Since the global financial crisis, the market for federal funds has changed markedly. In this post, we take a closer look at who is currently trading in the federal funds market, as well as the reasons for their participation.
Liberty Street Economics , Paper 20231010

Discussion Paper
Measuring the Ampleness of Reserves

Over the past fifteen years, reserves in the banking system have grown from tens of billions of dollars to several trillion dollars. This extraordinary rise poses a natural question: Are the rates paid in the market for reserves still sensitive to changes in the quantity of reserves when aggregate reserve holdings are so large? In today’s post, we answer this question by estimating the slope of the reserve demand curve from 2010 to 2022, when reserves ranged from $1 trillion to $4 trillion.
Liberty Street Economics , Paper 20221005

Working Paper
Monetary policy implementation with an ample supply of reserves

Methods of monetary policy implementation continue to change. The level of reserve supply—scarce, abundant, or somewhere in between—has implications for the efficiency and effectiveness of an implementation regime. The money market events of September 2019 highlight the need for an analytical framework to better understand implementation regimes. We discuss major issues relevant to the choice of an implementation regime, using a parsimonious framework and drawing from the experience in the United States since the 2007-2009 financial crisis. We find that the optimal level of reserve supply ...
Working Paper Series , Paper WP-2020-02

Discussion Paper
Dropping Like a Stone: ON RRP Take-up in the Second Half of 2023

Take-up at the Overnight Reverse Repo Facility (ON RRP) has halved over the past six months, declining by more than $1 trillion since June 2023. This steady decrease follows a rapid increase from close to zero in early 2021 to $2.2 trillion in December 2022, and a period of relatively stable balances during the first half of 2023. In this post, we interpret the recent drop in ON RRP take-up through the lens of the channels that we identify in our recent Staff Report as driving its initial increase.
Liberty Street Economics , Paper 20231219

Journal Article
The Market Events of Mid-September 2019

This article studies the mid-September 2019 stress in U.S. money markets: On September 16 and 17, unsecured and secured funding rates spiked, and on September 17, the effective federal funds rate broke the ceiling of the Federal Open Market Committee (FOMC) target range. We highlight two factors that may have contributed to these events. First, reserves may have become scarce for at least some depository institutions, in the sense that these institutions’ reserve holdings may have been close to, or lower than, their desired level. Moreover, frictions in the interbank market may have ...
Economic Policy Review , Volume 27 , Issue 2 , Pages 26

Report
How Abundant Are Reserves? Evidence from the Wholesale Payment System

Before the era of large central bank balance sheets, banks relied on incoming payments to fund outgoing payments in order to conserve scarce liquidity. Even in the era of large central bank balance sheets, rather than funding payments with abundant reserve balances, we show that outgoing payments remain highly sensitive to incoming payments. By providing a window on liquidity constraints revealed by payment behavior, our results shed light on thresholds for the adequacy of reserve balances. Our findings are timely, given the ongoing shrinking of central bank balance sheets around the world in ...
Staff Reports , Paper 1040

Discussion Paper
How Bank Reserves Are Distributed Matters. How You Measure Their Distribution Matters Too.

Changes in the distribution of banks’ reserve balances are important since they may impact conditions in the federal funds market and alter trading dynamics in money markets more generally. In this post, we propose using the Lorenz curve and Gini coefficient as a new approach to measuring reserve concentration. Since 2013, concentration, as captured by the Lorenz curve and the Gini coefficient, has co-moved with aggregate reserves, decreasing as aggregate reserves declined (such as in 2015-18) and increasing as aggregate reserves increased (such as at the onset of the COVID-19 pandemic).
Liberty Street Economics , Paper 20201124

Discussion Paper
From Policy Rates to Market Rates—Untangling the U.S. Dollar Funding Market

How do changes in the interest rate that the Federal Reserve pays on reserves affect interest rates in money markets in which the Fed does not participate? And through which channels do changes in the so-called administered rates influence rates in onshore and offshore U.S. dollar money markets? This post offers an interactive map illustrating the web of relationships between the Fed, key market players, and the various instruments in the U.S. dollar funding market.
Liberty Street Economics , Paper 20190708

FILTER BY year

FILTER BY Content Type

FILTER BY Author

FILTER BY Jel Classification

E58 14 items

E52 11 items

E42 8 items

G1 7 items

E5 6 items

G2 6 items

show more (9)

FILTER BY Keywords

monetary policy implementation 10 items

monetary policy 8 items

federal funds market 7 items

overnight reverse repo (ON RRP) 4 items

ample reserve supply 3 items

ample reserves 3 items

show more (57)

PREVIOUS / NEXT