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Narrow banking with modern depository institutions: Is there a reason to panic?

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dc.contributor.author Rodríguez Mendizábal, Hugo
dc.date.accessioned 2017-01-17T09:00:47Z
dc.date.available 2017-01-17T09:00:47Z
dc.date.issued 2017-01
dc.identifier.uri http://hdl.handle.net/10230/27912
dc.description.abstract What would be the effect of imposing a 100 percent reserve requirement to depository institutions? This paper contends that reserves do not compete with loans on the asset side of bank’s balance sheets. Thus, they only affect liquidity provision by banks indirectly through their impact on the cost of loan and deposit creation. This cost could be driven to zero if, as the Eurosystem does, central banks remunerated required reserves at the same rate of their refinancing operations. The paper argues that the crucial constraint imposed by a fully backed banking system is collateral availability by depository institutions.
dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries ADEMU Working Paper Series;52
dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.
dc.rights.uri http://creativecommons.org/licenses/by/4.0/
dc.title Narrow banking with modern depository institutions: Is there a reason to panic?
dc.type info:eu-repo/semantics/workingPaper
dc.subject.keyword Firm financing
dc.subject.keyword Investment
dc.subject.keyword Debt maturity
dc.subject.keyword Credit spreads
dc.subject.keyword Debt dilution
dc.subject.keyword Narrow banking
dc.subject.keyword Endogenous money
dc.subject.keyword Interbank market
dc.subject.keyword Bank solvency
dc.subject.keyword Liquidity
dc.subject.keyword Monetary policy
dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
dc.rights.accessRights info:eu-repo/semantics/openAccess


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