Surge in excess reserves drives overnight interbank rate to ‘floor of corridor'
A surge in the amount of excess reserves at banks drives the overnight interbank market rate to the floor of corridor, reduces its volatility and decreases market volume, while counterparty risk pushes up the overnight rate, according to a recent Reserve Bank of Australia (RBA) working paper analysing the impact of unconventional monetary policies on the overnight interbank market.
The Impact of Unconventional Monetary Policies on the Overnight Interbank Market by Morten Bech and Cyril Monnet
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