Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 1, 2016 erstellt
Description:
The recent empirical studies suggest that a change in the policy interest rate has a significant impact on the liquidity management of the banks.Focusing on the role of the interbank market in mitigating a trade-off associated with the cost of precautionary hoarding of liquidity, this paper proposes a new transmission channel of the interest rate policy to the banking stability through the banks' liquidity management.The announced policy rate should reflect the tightness of the interbank market during the shock, which is given by the combination of its probability and severity.Even though the probability of the shock is low, as long as its severity is high, the policy rate should be fixed at its lower end of the target range for securing the banking stability.Capital requirements play a role in strengthening the banking stability by ensuring that the banks insulate their depositors from the shock.The level of capital requirements should depend on the policy rate, which suggests that the substantial expansion of the role of central banks helps the banking stability