Liquid Asset Ratios and Financial Sector Reform

October 1, 1997

Preview Citation

Format: Chicago

Anne Marie Gulde. Liquid Asset Ratios and Financial Sector Reform, (USA: International Monetary Fund, 1997) accessed December 30, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

As a monetary, selective credit, and government debt-management instrument, a liquid asset ratio is generally inefficient and may introduce serious distortions. However, it may play a limited role as a prudential instrument, particularly in less sophisticated banking systems or in the context of currency board arrangements. Recent trends in the use of this instrument have been to either abolish it altogether or to design it so as to minimize distortions. When necessary, these changes have been part of a broader effort to make financial intermediation more efficient by relying more on markets and less on regulations.

Subject: Asset and liability management, Bank deposits, Banking, Commercial banks, Financial institutions, Government debt management, Government securities, Liquidity management, Public financial management (PFM), Securities

Keywords: Baltics, Bank liquidity, Bank reserves, Banking Regulation, Banks, Cash reserves, Central bank, Central Bank Policy, Commercial banks, Contractionary monetary policy, Credit instrument, Debt management, Excess reserves, Global, Government debt management, Government debt strategy, Government securities, Liquid asset requirement, Liquid asset requirements, Liquidity management, Monetary management, Monetary policy, Private sector, Requirement design, Securities, Treasury certificate, WP

Publication Details

Pages:

62
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1997/144
Stock No:

WPIEA1441997
ISBN:

9781451856408
ISSN:

1018-5941

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