The new/old art of monetary stability
Reserve requirements for US banks make an unexpected return and may affect repo market
The financial system shifted to a collateralised model in the last 15 years. That shift gave repo the role of principal guarantor of financial stability. This paper by Fed staff is a fascinating glimpse of their Defence Against the Dark Arts of monetary disturbance in the new regime. The summary TL;DR is that financial system demand for liquidity is clo…
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