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IMF researchers present guide to enabling negative interest rates
Exchange rate between cash and bank reserves is the “best approach”, researchers say
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Creating an exchange rate between paper currency and bank reserves is the “best approach” for enabling negative interest rates, a paper published by the International Monetary Fund argues.
In the publication, Ruchir Agarwal and Miles Kimball provide a guide for implementing a set of tools that would enable central banks to use deep negative rates to fight a recession. They recommend creating an exchange rate in the central bank cash window – what they call “the clean approach”.
For instance
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