Monetary Policy with a Touch of Basel

Monetary Policy with a Touch of Basel

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The typical portrait of monetary policy has the banks and the money supply being manipulated through changes in bank reserves. However, with only a small portion of bank deposits now subject to reserve requirements, an alternative explanation of how monetary policy influences banks is needed. Over the last decade, capital requirements have effectively replaced reserve requirements as the main constraint on the behavior of banks. This paper explores the implications of Basel capital requirements for monetary policy. In particular, we identify a qbank balance-sheet channelq of monetary policy, which operates through the impact on the money stock and the economy.... and Masao Yoneyama, (1999), aquot;Capital Requirements and Bank Behavior: The Impact of the Basel Accord, aquot; Basel ... (2000), aquot;Emerging Problems with the Basel Capital Accord: Regulatory Capital Arbitrage and Related Issues, aquot; Journal of Banking and Finance, Vol. ... aquot;What Do a Million Observations on Banks Say About the Transmission of Monetary Policy, aquot; The American Economic Review, Vol.

Title:Monetary Policy with a Touch of Basel
Author:Ralph Chami, Thomas F. Cosimano
Publisher:International Monetary Fund - 2001-10-01


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