A Simple Model of Interbank Trading with Tiered Remuneration

Toshifumi Nakamura


A negative interest rate policy is often accompanied by tiered remuneration, which allows exemption from negative rates. This study proposes a basic model of interest rates in an interbank market with a tiering system. The results largely mirror actual market developments in late 2019, when the European Central Bank introduced the tiering system and the Switzerland National Bank modified it.

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DOI: https://doi.org/10.11114/aef.v8i1.5023


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Applied Economics and Finance    ISSN 2332-7294 (Print)   ISSN 2332-7308 (Online)

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