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nbbo2
nbbo2
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It's said the theoretical aim of the ECB Two-tier systemECB Two-tier system (exempt a portion of the excess reserves from negative rates) was designed to:

  1. offset the direct costs of negative interest rates on banks, thereby helping to sustain the pass-through of low policy rates to bank lending rates

  2. push banks to trade/lend their excess liquidity in the money markets.

I get point one, but struggling with 2), can you help out?

It's said the theoretical aim of the ECB Two-tier system (exempt a portion of the excess reserves from negative rates) was designed to:

  1. offset the direct costs of negative interest rates on banks, thereby helping to sustain the pass-through of low policy rates to bank lending rates

  2. push banks to trade/lend their excess liquidity in the money markets.

I get point one, but struggling with 2), can you help out?

It's said the theoretical aim of the ECB Two-tier system (exempt a portion of the excess reserves from negative rates) was designed to:

  1. offset the direct costs of negative interest rates on banks, thereby helping to sustain the pass-through of low policy rates to bank lending rates

  2. push banks to trade/lend their excess liquidity in the money markets.

I get point one, but struggling with 2), can you help out?

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Student
Student
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ECB - Two Tier System

It's said the theoretical aim of the ECB Two-tier system (exempt a portion of the excess reserves from negative rates) was designed to:

  1. offset the direct costs of negative interest rates on banks, thereby helping to sustain the pass-through of low policy rates to bank lending rates

  2. push banks to trade/lend their excess liquidity in the money markets.

I get point one, but struggling with 2), can you help out?