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Stressed Outflows and the Supply of Central Bank Reserves

Author

Listed:
  • Ryan Bush
  • Adam Kirk
  • Antoine Martin
  • Phillip Weed
  • Patricia Zobel

Abstract

Since the financial crisis, banking regulators around the world have been intensely aware of liquidity risk and, in part as a response, have introduced the Basel III liquidity regulation. Today, the world's largest banks hold substantial liquidity buffers comprising both securities and central bank reserves, to satisfy internal liquidity stress tests and minimum quantitative regulatory requirements. The appropriate level of liquidity buffers depends on the likely outflows in a market stress situation. In this post, we use public data to provide a rough estimate of stressed outflows that the largest banks would face and consider how they could meet these outflows.

Suggested Citation

  • Ryan Bush & Adam Kirk & Antoine Martin & Phillip Weed & Patricia Zobel, 2019. "Stressed Outflows and the Supply of Central Bank Reserves," Liberty Street Economics 20190220, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:87314
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    File URL: https://libertystreeteconomics.newyorkfed.org/2019/02/stressed-outflows-and-the-supply-of-central-bank-reserves.html
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    Cited by:

    1. Gara Afonso & Kyungmin Kim & Antoine Martin & Ed Nosal & Simon M. Potter & Sam Schulhofer-Wohl, 2023. "Monetary Policy Implementation with Ample Reserves," FRB Atlanta Working Paper 2023-10, Federal Reserve Bank of Atlanta.
    2. Adam Copeland & Darrell Duffie & Yilin Yang, 2021. "Reserves Were Not So Ample After All," Staff Reports 974, Federal Reserve Bank of New York.

    More about this item

    Keywords

    reserve; stressed outflows; Fed balance sheet;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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