Distribution of reserves determines QE and QT’s impact – BoE paper
Policies have ‘highly asymmetric’ impacts on reserve-scarce banks, researchers say
Quantitative easing (QE) and quantitative tightening (QT) have a greater impact on banks with low levels of reserves, according to a Bank of England (BoE) study published on August 9.
The working paper found that when the central bank shrunk the amount of reserves in the financial system through QT, it triggered increased borrowing by banks with limited reserves and pushed up the interbank and wholesale interest rates.
The study also found that net-deposit withdrawal shocks, or bank runs, had
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