Are there optimal multiple reserve requirements?

Marco Espinosa-Vega () and Steven Russell

No 96-18, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: A number of developing countries have adopted deficit-finance regimes involving multiple reserve requirements. One question the previous literature on this phenomenon has not addressed is whether multiple-reserves regimes can improve on regimes involving single-currency-reserve requirements if the policy settings of the latter regimes are assumed to be chosen optimally. We find that a \"conventional\" multiple-reserves regime--a regime with positive nominal rates on reservable bonds--cannot Pareto-improve an optimal single-currency-regime but can, in some cases, increase social welfare over such a regime.

Keywords: Banks and banking, Central; Bank reserves (search for similar items in EconPapers)
Date: 1996
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Published in Journal of Financial Intermediation, January 2001

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Journal Article: Are There Optimal Multiple-Reserve Requirements? (2001)
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