The Temporary Abode Of Interbank Market Liquidity

In 2013,there was a widespread liquidity shortage(money shortage)in the interbank market caused by the rumored crisis of a bank's fund default.Since May,the funds interest rate in the financial market has soared across the board.After entering June,the interbank market interest rate soared rapidly,among which the overnight interest rate rose particularly fast.The Shibor interest rate surged 495.8bp in three days,and the capital interest rate was "unprecedentedly fierce".The personage and the researchers usually in the hope of central bank,hope that the central bank open market operations to alleviate the situation of interbank liquidity is scarce,and liquidity of the internal structural problems often is ignored,when the central bank to "inject water",its policy effectiveness is difficult to reach the expected main reason is that a lot of money still stays in the banking system,financial system rich but can't put it out,or difficult to apply to the demand.The structural problem of liquidity is becoming more and more obvious.How to unblock the channel of monetary policy transmission is the first priority to maintain financial market stability.After the occurrence of partial liquidity risk,it spreads continuously through the direct channel of the interbank market and the indirect channel of the asset market.If the risk is blocked without intervention,it will eventually evolve into a large-scale liquidity risk,leading to the occurrence of systemic risk in the financial system.Specifically,interbank liquidity risk transmission mechanisms can be summarized as the following:the bank suffered a liquidity shocks,interbank market face difficulties,relatively liquid banks choose to hold,and to save the central bank as the excess reserves,in order to profit from such assets at a discount in the future or for precautionary motive,and refused to fall in a liquidity trap bank lending,the consistency between banks behavior caused the interbank market liquidity shortage,and in the asset market sharply sales assets to assets discount degree deepening,overall increased volatility in financial markets,the threat of financial market stability.Jean Tirole(2011)pointed out in the Inside and Outside Liquidity that commercial banks in the observed local liquidity risk occurs,for its own precautionary motive and predatory motives,tend to be in the form of excess reserves in the storage part of central bank liquidity,and the overhoarding of liquidity strategy will further accelerate and intensify the coming of the interbank market scarce liquidity situation.How to restrain the occurrence of this kind of behavior,and help banks with excessive excess reserves(mostly systemic banks)to release this part of liquidity into the market and make efficient use of the liquidity of the banking system is the main problem that this paper aims to solve.Friedman and Schwartz(1963)interpreted currency as a "temporary abode of purchasing power",in which the quantity of money is the buffer that the economic individual keeps in hand.Similarly,excess reserves held at the central bank can be understood as "temporary abode of liquidity".From policymakers and regulators,effectively release to liquidity in the market to show "water" state,can be the most direct way to alleviate the condition of the market liquidity dried up,and from the point of market main body,stored in the central part of the excess reserves in "ice"state,liquidity freeze in the bank account of this part,the waste cause liquidity to a certain extent.In conclusion,this paper start from the historical experience of"money shortage",from the Angle of the reserve structure to set out,trying to design an effective policy measures,when liquidity crisis in the banking system of "waste"released into the interbank market liquidity,improve the efficiency of the use of excess reserves,thus effectively relieve fund surface tension,prevent liquidity shocks evolved into a wide range of a liquidity crisis and financial market systemic risk.Historical data are limited by the difficulty in identifying and frequency of the response to impact,limited ability to explain the specific mechanism of interbank risk contagion,still dominated by theoretical analysis and empirical test methods for interbank liquidity risk contagion,and the requirements of empirical test on data are also very harsh.The existing researches mainly focus on theory and simulation,lack the decision-making basis of real actors,and it is even more difficult to analyze the policy effectiveness of the interest rate of excess reserve.Then,this paper using experimental economics research tool to research the feasibility and effectiveness of the design policy,the central bank is dedicated.to provide you with a policy intervention framework of applicability,experimental research methods in the paper on the premise of meet the theoretical model assumptions,to reasonable abstraction of real financial markets,through the experimental variable control and the experimenter money incentive.The direction of inter-bank liquidity is studied through the method of laboratory experiment,and it is specifically explored whether the restriction on the interest rate of excess reserves can effectively prevent commercial Banks from excessive storage of liquidity,so as to inject liquidity into the interbank lending market,and avoid the negative impact of small liquidity shocks to amplify risks.In a practical sense,it can provide an effective policy tool for the central bank to provide feasible solutions after the occurrence of systemic risks,rather than just giving advice on the prior prevention such as supervision,which is of great significance for the practical operation of maintaining the stability of financial markets.Policymakers and macro-regulators should understand that it is more realistic to anticipate future risk points and active risk policy response mechanisms than to simply emphasize regulation and ex ante prevention.