![]() ![]() Reasons why for repo: First, the facility could be used to support interest rate control by establishing a ceiling on repo rates, thereby guarding against unwanted spikes in money market rates. This plan supposedly free up $175 to $300 billion in reserves. Banks are now using reserves to help meet liquidity regulations, such as the liquidity coverage ratio (LCR) and resolution planning. Designed to allow banks to reduce reserve requirements. Which means banks dont have to hold $800 billion in reserved if the market goes tits up. ![]() This standard repo is to serve as backstops in money markets to support the effective implementation of monetary policy and smooth market functioning. Can accommodate a couple trillion in RPP. RPP was $50 billion max but was raised to $80 billion max per participant.
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