Debt, Deregulation and Financial Crises
Chapter 26: Creating a system-wide asset-based reserve system
Creating an asset-based reserve system would require changes in the way the Fed conducts monetary policy and in the structure of its balance sheet as well as the balance sheets of private financial firms. As it does now in transactions with dealers in government securities, the Fed purchases assets from (and subsequently returns them to) the asset side of private financial firms’ balance sheets. Tables in this chapter show these changes for the Fed as a shift of bank reserves from the liability to the asset side of its balance sheet and a shift in repurchase agreements and financial sector discounts to the liability side of its balance sheet. The central bank would earn interest on the repos it holds and the collateral it holds for discounts in exchange for the interest-free liabilities it creates for private institutions.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.