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Large Bank Cash Balances and Liquidity Regulations

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Abstract

The Federal Open Market Committee (FOMC) has recently communicated its aim to continue implementing monetary policy in a regime that maintains an ample supply of reserves, though with a significantly lower level of reserves than has prevailed in recent years. The liquidity needs of the largest U.S. commercial banks play an important role in understanding the banking system’s appetite for actual reserve holdings, which we refer to as bank reserve demand. In this post, we discuss the recent evolution of large bank cash balances and the effect of liquidity regulations on these balances. In part two of this series, we provide new evidence on how the largest banks manage their liquidity needs on a daily basis.

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  • Jeffrey Levine & Asani Sarkar, 2019. "Large Bank Cash Balances and Liquidity Regulations," Liberty Street Economics 20190715, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:87344
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    Keywords

    cash management; large banks; LCR;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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