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| Type | Working Paper |
| Scope | Discipline-based scholarship |
| Title | The price of money: The reserves convertibility premium over the term structure |
| Organization Unit | |
| Authors |
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| Language |
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| Institution | University of Zurich |
| Series Name | CEPR Discussion Papers |
| Number | 18371 |
| ISSN | 0265-8003 |
| Number of Pages | 55 |
| Date | 2023 |
| Abstract Text | Central-bank money provides utility by serving as means of exchange for virtually all transactions in the economy. New reserves (money) are issued to banks in exchange for collateral such as government bonds. An asset's degree of direct convertibility into fresh reserves may affect its utility and, consequently, its market price. We show the existence of a government-bond reserves convertibility premium, which tapers off at longer maturities. Essentially, there is a pure monetary component to some asset prices. Our findings have implications for our understanding of liquidity premia, the term structure of interest rates, and the impact of central-bank collateral policy. |
| Free access at | Official URL |
| Official URL | https://cepr.org/publications/dp18371 |
| Other Identification Number | merlin-id:24065 |
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