Quarter of central banks use tiered reserves remuneration
Corridor systems remain most common method of setting short-term interest rate
Close to a quarter of central banks use tiering to set variable interest rates on reserve balances, the Monetary Policy Benchmarks show.
Ten of 41 central banks (24.4%) use tiering, which is often deployed as a means of encouraging trading in the interbank market, even where excess reserves are present. Under such a system, a portion of reserves are remunerated at the policy rate, while any reserves above a threshold or “quota” receive a different – usually lower – rate. This keeps rates
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