Monetary Policy Analysis > Sleep Aid
Date: October 7, 2019
From: Bill Nelson
Subject: Sleep Aid
For those of you unable to sleep over concerns the FOMC appears to be concluding that the repo market turmoil simply means that the structural demand for reserves is $1.5 trillion (over 40 times their initial estimate in 2008), you can listen to my soothing podcast on these issues just released on Macro Musings https://soundcloud.com/macro-musings/.
P.S. Here are the posts I’ve posted on the repo market turmoil.
On September 24, we posted a note that discusses the implications for the Fed’s monetary policy implementation framework. https://bpi.com/fed-at-a-crossroad/
On September 26, we posted a note that discusses the role of bank regulations in the turmoil in money markets. https://bpi.com/bank-regulations-and-turmoil-in-repo-markets/
On October 1, we posted a note on how volatility of two liabilities of the Fed–Treasury General Account and the Foreign Repo Pool–contributed to the FOMC’s recent decision to continue using a large-balance-approach to implementing monetary policy. https://bpi.com/two-little-noticed-and-self-inflicted-causes-of-the-feds-current-monetary-policy-implementation-predicament/
On September 18, we posted a note that explains the events and their implications. https://bpi.com/what-just-happened-in-money-markets-and-why-it-matters/
And on September 3, we posted a note that indicated the turmoil was coming and suggested a way the Fed could delay it. https://bpi.com/impending-money-market- volatility-prompts-warning-light-for-lcr-tune-up/
Comments or discussion most welcome.
Disclaimer: The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Bank Policy Institute or its membership, and are not intended to be, and should not be construed as, legal advice of any kind.