Negative Policy Rates, Banking Flows and Exchange Rates
Anwar Khayat ()
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Anwar Khayat: Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS, http://www.amse-aixmarseille.fr/en/users/khayat#profile-membres
No 1538, AMSE Working Papers from Aix-Marseille School of Economics, France
Setting negative nominal rates is one of the unconventional policies implemented after the Great Recession to overcome the Zero Lower Bound. Using data from the euro area and Denmark, I assess the impact of introducing a negative interest rate on reserves. I find that it did put a depreciation pressure on the currency due to a reversal in banking flows. This effect is not only caused by policy differentials, but also by a distinct impact of going into negative territory from lowering interest rates.
Keywords: Monetary policy; negative nominal rates; exchange rates; banking flows (search for similar items in EconPapers)
JEL-codes: E52 E58 F31 (search for similar items in EconPapers)
Date: 2015-09, Revised 2015-09
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1538
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