DP7789 Asymmetric Standing Facilities: An Unexploited Monetary Policy Tool

Author(s): Gabriel Pérez-Quirós, Hugo Rodriguez Mendizabal
Publication Date: April 2010
Keyword(s): fine tuning operations, Monetary policy implementation, overnight interest rates, standing facilities
JEL(s): E43, E52, e58
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=7789

This paper analyzes the role of standing facilities in the determination of the demand for reserves in the overnight money market. In particular, we study how the asymmetric nature of the deposit and lending facilities could be used as a powerful policy tool for the simultaneous control of prices and quantities in the market for daily funds.