 Monetary policy and reserve requirements with a zero-interest digital euroPaolo Fegatelli Journal of Macroeconomics, 2024, vol. 80, issue C Abstract: This study presents an analytical framework to investigate the use of reserve requirements as an indirect instrument to manage CBDC flows in an environment with significantly positive rates. This would complement two other possible instruments: hard limits, whose sole use may raise some concerns, and CBDC remuneration, which in a positive rate environment is not considered a viable option. As in the case of emerging market economies with a flexible exchange rate, in a CBDC framework reserve requirements could be used as a countercyclical tool for macroeconomic stabilization to influence bank lending/funding conditions consistently with the monetary policy stance. In an ample-reserves regime, the effectiveness of this tool would be favored by retaining the interest rate on required reserves and the interest rate on excess reserves (the real key policy rate) as two distinct policy instruments, with the former remaining stable below the latter. Keywords: Reserve requirement; Central bank digital currency; Digital euro; Monetary policy; Excess reserves; Bank lending (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:80:y:2024:i:c:s0164070424000120 DOI: 10.1016/j.jmacro.2024.103597 Access Statistics for this article Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos More articles in Journal of Macroeconomics from Elsevier |
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