Two-Tier System for Remunerating Excess Reserve Holdings

53 Pages Posted: 13 Sep 2022

See all articles by Miguel Boucinha

Miguel Boucinha

European Central Bank (ECB)

Lorenzo Burlon

European Central Bank (ECB)

Marco Corsi

European Central Bank (ECB)

Guido della Valle

European Central Bank (ECB)

Jens Eisenschmidt

Morgan Stanley

Iwona Marmara

European Central Bank (ECB)

Sebastiaan Pool

European Central Bank (ECB)

Julian Schumacher

European Central Bank (ECB)

Olivier Vergote

European Central Bank (ECB)

Date Written: September 1, 2022

Abstract

This paper reviews the experience of the ECB with the two-tier system for excess reserve remuneration that exempted a portion of banks’ excess liquidity (EL) holdings from the negative interest rate of the ECB’s deposit facility.

Keywords: excess liquidity, exemption scheme, monetary policy transmission, negative interest rates, two-tier system

JEL Classification: E41, E43, E52, E58, G11, G12

Suggested Citation

Boucinha, Miguel and Burlon, Lorenzo and Corsi, Marco and Valle, Guido della and Eisenschmidt, Jens and Marmara, Iwona and Pool, Sebastiaan and Schumacher, Julian and Vergote, Olivier, Two-Tier System for Remunerating Excess Reserve Holdings (September 1, 2022). ECB Occasional Paper No. 2022/302, Available at SSRN: https://ssrn.com/abstract=4217220 or http://dx.doi.org/10.2139/ssrn.4217220

Miguel Boucinha (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Lorenzo Burlon

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Marco Corsi

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Guido della Valle

European Central Bank (ECB) ( email )

Jens Eisenschmidt

Morgan Stanley ( email )

1585 Broadway
New York, NY 10036
United States

Iwona Marmara

European Central Bank (ECB) ( email )

Sebastiaan Pool

European Central Bank (ECB) ( email )

Julian Schumacher

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Olivier Vergote

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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