Central Bank and Commercial Banks' Liquidity Management – What is the Relationship?

@inproceedings{Bindseil2003CentralBA,
  title={Central Bank and Commercial Banks' Liquidity Management – What is the Relationship?},
  author={Ulrich Bindseil and Benedict Weller and Flemming Reinhardt W{\"u}rtz},
  year={2003}
}
The paper explores the relation between individual banks' liquidity management in the euro area and the ECB's management of the aggregate current accounts held by banks with the Eurosystem. It is argued that, in the case of the euro area with its large, remunerated reserve requirements that have to be fulfilled only on average over a one-month period, the banks' demand for working balances to serve as a buffer against market imperfections is always below reserve requirements. It is therefore… CONTINUE READING

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