On the liquidity coverage ratio and monetary policy implementation

Morten Bech () and Todd Keister

BIS Quarterly Review, 2012

Abstract: Basel III introduces the first global framework for bank liquidity regulation. As monetary policy typically involves targeting the interest rate on interbank loans of the most liquid asset - central bank reserves - it is important to understand how this new requirement will impact the efficacy of current operational frameworks. Morten Bech (BIS) and Todd Keister (Rutgers University) extend a standard model of monetary policy implementation to include the new liquidity regulation. Based on this model, they find that the regulation does not impair central banks' ability to implement monetary policy, but operational frameworks may need to adjust.

JEL-codes: E43 E52 E58 G28 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (44)

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