[go: up one dir, main page]

IDEAS home Printed from https://ideas.repec.org/a/taf/revpoe/v31y2019i2p145-158.html
   My bibliography  Save this article

A System with Zero Reserves and with Clearing Outside of the Central Bank: The Canadian Case

Author

Listed:
  • Marc Lavoie
Abstract
In a number of ways, implementing monetary policy in Canada stands apart from monetary policy in most other industrial countries. Commercial banks and other participants to the main clearinghouse – the large-value transfer system (LVTS) – hold no reserves at the central bank. Clearing and settlement is both in real time and net, while only settlement occurs on the books of the central bank. The Bank of Canada does not conduct open-market operations and rarely intervenes in the repo market; and despite this, the collateralized overnight rate always remains within 2 or 3 basis points of the target interest rate. The paper explains why this is so by describing the setup of the Canadian clearing and settlement system, including the rules that have been put forward in case a bank defaults on its due payments before settlement occurs. Some puzzles that arose through the years are also discussed, as well as the unlikely prospect of introducing blockchain technology in the Canadian clearing and settlement system.

Suggested Citation

  • Marc Lavoie, 2019. "A System with Zero Reserves and with Clearing Outside of the Central Bank: The Canadian Case," Review of Political Economy, Taylor & Francis Journals, vol. 31(2), pages 145-158, April.
  • Handle: RePEc:taf:revpoe:v:31:y:2019:i:2:p:145-158
    DOI: 10.1080/09538259.2019.1616922
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/09538259.2019.1616922
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/09538259.2019.1616922?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stefano Di Bucchianico, 2021. "Negative Interest Rate Policy to Fight Secular Stagnation: Unfeasible, Ineffective, Irrelevant, or Inadequate?," Review of Political Economy, Taylor & Francis Journals, vol. 33(4), pages 687-710, October.
    2. Kim, Minseong, 2024. "The nature of monetary policy in New Keynesian models and the role of high-powered money," OSF Preprints dzjsc, Center for Open Science.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:revpoe:v:31:y:2019:i:2:p:145-158. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CRPE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.