00000nam 2200000za 4500 9.842693 CaOODSP 20221107152358 cr ||||||||||| 170830s2017 oncd ob f000 0 eng d CaOODSP eng eng fre n-cn--- FB3-5/2017-25E-PDF Boutros, Michael. Monetary policy implementation in a negative rate environment [electronic resource] / by Michael Boutros and Jonathan Witmer. [Ottawa] : Bank of Canada, 2017. ii, 41 p. : col. charts Bank of Canada staff working paper, 1701-9397 ; 2017-25 "July 2017." Includes bibliographical references. "Monetary policy implementation could, in theory, be constrained by deeply negative rates since overnight market participants may have an incentive to invest in cash rather than lend to other participants. To understand the functioning of overnight markets in such an environment, we add the option to exchange central bank reserves for cash to be standard workhorse model of monetary policy implementation (Poole 1968). Importantly, we show that monetary policy is not constrained when just the deposit rate is below the yield on cash. However, it could be constrained when just the deposit rate is below the yield on cash. At this point, the overnight rate equals the yield on cash instead of the target rate. Modifications to the implementation framework, such as a tiered remuneration of central bank deposits contingent on cash withdrawals, can work to restore the implementation of monetary policy such that the overnight rate equals the target rate."--Abstract, p. ii. Includes abstract in French. gccst Monetary policy gccst Interest rates Witmer, Jonathan, 1975- Bank of Canada. Staff working paper (Bank of Canada) 1701-9397 ; 2017-25 (CaOODSP)9.806221 PDF 555 KB https://publications.gc.ca/collections/collection_2017/banque-bank-canada/FB3-5-2017-25-eng.pdf