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The importance of central bank reserves

· Andrew Bailey, Governor of the Bank of England (United Kingdom)

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· Andrew Bailey Wiki · Bank of England WikiThe importance of central bank reserves

ContextLecture by Andrew Bailey, Governor of the Bank of England, in honour of Charles Goodhart, hosted by the London School of Economics' Financial Markets Group, London, 21 May 2024.

Why it mattersBailey sets out how the Bank of England will supply reserves on demand as its balance sheet shrinks.

Problems raised
  1. The balance sheet's future size must be decided.
  2. Reserves are key for stability.
  3. Monetary control must be kept.
Solutions proposed
  1. Supply reserves on demand through repo.
  2. Keep headroom to use the balance sheet again.
  3. Control policy through Bank Rate.
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