Interest on excess reserves and Interoperability: Difference between pages

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imported>Doug Williamson
(Amended spelling of depository.)
 
imported>Doug Williamson
(Standardise quote presentation.)
 
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(IOER).  
''Information technology''.


Regulated commercial banks and other depositary institutions are generally required to hold minimum levels of deposits with their central bank, in relation to their liabilities or for other regulatory reasons.  
Interoperability is the ability of computer systems or software from different vendors to exchange and make use of information between each other.


These central bank deposits are known as 'reserves'.


<span style="color:#4B0082">'''''Positioned to scale'''''</span>


In some cases, these deposits of the commercial banks with the central bank may be greater than the minimum level required by the regulations.
:"... our focus on industry collaboration and open networks uniquely positions Voltron to scale by leveraging [our] Corda Network to ensure interoperability with other global trade initiatives and other networks - including supply chain, cash, insurance and identity."


When the central bank pays interests on such deposits, this interest is known as 'interest on excess reserves'.
:''The Treasurer magazine, December 2018 / January 2019, p7, David E Rutter, CEO, R3''




Payment of interest on excess balances means that banks are less likely to lend central bank deposits ([[reserves]]) among themselves (in 'interbank' or (US) 'federal funds' transactions) at rates below the rate paid on the excess.
== See also ==
* [[Fintech]]
* [[Information technology]]
* [[MIS]]
* [[Regtech]]
* [[Telematics]]


Varying the interest rate on excess reserves, then, allows the central bank to influence short-term rates in the economy generally.
[[Category:Trade_finance]]
 
 
In the US the Federal Reserve introduced a policy, its 'IOR policy', of paying interest on monetary institutions deposits ('reserves') in October 2008 and both required and excess reserves are remunerated.
 
The Financial Services Regulatory Relief Act of 2006 authorised payment of interest on balances of or on behalf of depositary institutions beginning October 1, 2011 but the Emergency Economic Stabilization Act of 2008 accelerated the effective date to October 1, 2008.
 
 
==See also==
* [[Federal Open Market Committee]]
* [[Reserve requirements]]
* [[Reserves]]
 
[[Category:Long_term_funding]]
[[Category:Compliance_and_audit]]

Revision as of 15:18, 1 January 2019

Information technology.

Interoperability is the ability of computer systems or software from different vendors to exchange and make use of information between each other.


Positioned to scale

"... our focus on industry collaboration and open networks uniquely positions Voltron to scale by leveraging [our] Corda Network to ensure interoperability with other global trade initiatives and other networks - including supply chain, cash, insurance and identity."
The Treasurer magazine, December 2018 / January 2019, p7, David E Rutter, CEO, R3


See also

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