IDEAS home Printed from https://ideas.repec.org/p/rbp/wpaper/2020-013.html
   My bibliography  Save this paper

Liquidity Regulation in a Monetary Economy

Author

Listed:
  • Aquino, Juan Carlos

    (Banco Central de Reserva del Perú)

Abstract

A market failure that justifies liquidity regulation lies on the incompleteness of financial markets when there is risk about the aggregate distribution of transaction types. I develop a framework in which outside (fiat, government-provided) and inside (plastic, bank-created) money co-exist as means of payment under either complete or incomplete financial markets for aggregate risk. The welfare analysis is reduced to comparing only two parameters: the currency-to-liability ratio δ which is set by the government and the fraction ρ of banks’ depositors engaged in cash-only transactions (inside money cannot be accepted). In equilibrium, when δ

Suggested Citation

  • Aquino, Juan Carlos, 2020. "Liquidity Regulation in a Monetary Economy," Working Papers 2020-013, Banco Central de Reserva del Perú.
    • Handle: RePEc:rbp:wpaper:2020-013
    as

    Download full text from publisher

    File URL: https://www.bcrp.gob.pe/docs/Publicaciones/Documentos-de-Trabajo/2020/documento-de-trabajo-013-2020.pdf
    File Function: Application/pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Capital banks; financial markets; endogenous liquidity; regulation; monetary policy.;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbp:wpaper:2020-013. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Research Unit (email available below). General contact details of provider: https://edirc.repec.org/data/bcrgvpe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.