Template-Type: ReDIF-Paper 1.0
Author-Name: Gara Afonso 
Author-X-Name-First: Gara
Author-X-Name-Last: Afonso
Author-Name: Darrell Duffie
Author-X-Name-First: Darrell 
Author-X-Name-Last: Duffie
Author-Name: Lorenzo Rigon
Author-X-Name-First: Lorenzo
Author-X-Name-Last: Rigon
Author-Name: Hyun Song Shin
Author-X-Name-First: Hyun Song
Author-X-Name-Last: Shin
Title: How abundant are reserves? Evidence from the wholesale payment system
Abstract: Before the era of large central bank balance sheets, banks relied on incoming payments to fund outgoing payments in order to conserve scarce liquidity. Even in the era of large central bank balance sheets, rather than funding payments with abundant reserve balances, we show that outgoing payments remain highly sensitive to incoming payments. By providing a window on liquidity constraints revealed by payment behavior, our results shed light on thresholds for the adequacy of reserve balances. Our findings are timely, given the ongoing shrinking of central bank balance sheets around the world in response to inflation.
Length: 28 pages
Creation-Date: 2022-11
File-URL: https://www.bis.org/publ/work1053.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1053.htm
File-Format: text/html
Number: 1053
Keywords: real-time gross settlement (RTGS) systems, quantitative tightening, balance sheet management, reserve balances
Classification-JEL: E42, E44, E52, E58, G21 
Handle: RePEc:bis:biswps:1053