Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
But are those running costs so high that they are comparable to a fat % of the portfolio

Well, profits alone is a cost that can't go much below half a percent of the portfolio: 5 % return on equity is not outrageous, and you don't want banks to be gearing harder than about 10 or 20 to 1 in the ordinary case.

Wikipedia says somewhat otherwise

No, it says the same thing.

So, consumers have to pay to compete with the lending excess reserves option.


Does this mean that the banks automatically get the CB rate gains of the liquidity reserves?

Yes, any excess liquidity will be remunerated at the policy rate.

Do the CB assets increase at all times?

Yes, if the CB is doing its job right, its balance sheet should continually increase.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri May 20th, 2011 at 08:32:45 AM EST
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