A Simple Model of Interbank Trading with Tiered Remuneration

Toshifumi Nakamura

Applied Economics and Finance, 2021, vol. 8, issue 1, 74-77

Abstract: A negative interest rate policy is often accompanied by tiered remuneration, which allows exemption from negative rates. This study proposes a basic model of interest rates in an interbank market with a tiering system. The results largely mirror actual market developments in late 2019, when the European Central Bank introduced the tiering system and the Switzerland National Bank modified it.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:rfa:aefjnl:v:8:y:2021:i:1:p:74-77

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