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Monetary Policy Operations and the Financial System$
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Ulrich Bindseil

Print publication date: 2014

Print ISBN-13: 9780198716907

Published to Oxford Scholarship Online: October 2014

DOI: 10.1093/acprof:oso/9780198716907.001.0001

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Open Market Operations and Standing Facilities

Open Market Operations and Standing Facilities

(p.203) 13 Open Market Operations and Standing Facilities
Monetary Policy Operations and the Financial System

Ulrich Bindseil

Oxford University Press

During the financial crisis, central banks have made various changes to their standing facilities and open market operations. First, most central banks of large advanced monetary areas switched from a symmetric corridor approach to one in which the short-term interest rate is pegged to the remuneration rate of excess reserves (e.g. in the form of a deposit facility). Excess reserves dominated the money market mostly because of large-scale asset purchase programmes. The various reasons for central bank outright purchase programmes in a financial crisis are reviewed. Central banks also made more convenient their open market credit operations, namely by extending maturity and switching from auctions to so-called fixed-rate full allotment procedures.

Keywords:   excess reserves, outright purchase programmes, large-scale asset purchase programmes, maturity extension, fixed rate, full allotment procedure

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