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The cost of reserves

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  • Levy Yeyati, Eduardo

Abstract

The cost of holding reserves is often estimated as the sovereign spread over the risk-free return on reserves paid on the debt issued to purchase them, which ignores the benign effect of reserves on the spread. This paper illustrates this numerically, showing that these costs, as typically measured, may have been considerably overstated.

Suggested Citation

  • Levy Yeyati, Eduardo, 2008. "The cost of reserves," Economics Letters, Elsevier, vol. 100(1), pages 39-42, July.
    • Handle: RePEc:eee:ecolet:v:100:y:2008:i:1:p:39-42
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