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RBA Glossary definition for SOEs

SOEs – state owned enterprises

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Emergency Liquidity Injections

10 Oct 2019 RDP 2019-10
Nicholas Garvin
Under an unsecured or secured lending policy, the authority can charge ‘penalty rates’ to deter liquidity risk-taking, but to be credible, lending should be long term so that repayments are
https://www.rba.gov.au/publications/rdp/2019/2019-10.html

The Model

9 Oct 2019 RDP 2019-10
Nicholas Garvin
When banks have spare cash, so. L. D. 0. , market illiquidity m is zero, illustrated by. ... b. S. , banks are liquidity deficient and selling all their securities to securities buyers, so m is flat.
https://www.rba.gov.au/publications/rdp/2019/2019-10/the-model.html

Emergency Liquidity Injections

1 Oct 2019 RDP 2019-10
Nicholas Garvin
When banks have spare cash, so. L. D. 0. , market illiquidity m is zero, illustrated by. ... b. S. , banks are liquidity deficient and selling all their securities to securities buyers, so m is flat.
https://www.rba.gov.au/publications/rdp/2019/2019-10/full.html

Appendix B: Proofs

9 Oct 2019 RDP 2019-10
Nicholas Garvin
α. is discontinuous has measure zero, so m is almost everywhere continuously differentiable. ... Further, there is a finite measure of banks, so the set of s.
https://www.rba.gov.au/publications/rdp/2019/2019-10/appendix-b.html

Introduction

9 Oct 2019 RDP 2019-10
Nicholas Garvin
Both models show that low haircuts are beneficial for banks that need liquidity; this paper additionally demonstrates that ideal haircuts are not so low that the policy economically resembles unsecured lending. ... The price paid must be generous enough
https://www.rba.gov.au/publications/rdp/2019/2019-10/introduction.html

Conclusion

9 Oct 2019 RDP 2019-10
Nicholas Garvin
The positive effect of the constraint essentially offsets banks' fire sale externalities – neither are factored into banks' profit maximisation – and so does not incentivise liquidity risk-taking.
https://www.rba.gov.au/publications/rdp/2019/2019-10/conclusion.html

Liquidity Injection through Unsecured Lending

9 Oct 2019 RDP 2019-10
Nicholas Garvin
i. ,s. –i. ,r. u. ). Whenever m > 0, banks raise only the minimum liquidity required and do so via the cheapest sources available. ... i. given S, so that acting in line with other banks is the best response to their choices.
https://www.rba.gov.au/publications/rdp/2019/2019-10/liquidity-injection-through-unsecured-lending.html

Model Generalisations and Extensions

9 Oct 2019 RDP 2019-10
Nicholas Garvin
2. That is, banks' date 2 profit is positive if they fund the deficit completely through the capital injection (Corollary 8), so date 2 pay-off under their optimal choice must ... P. Assume a bank is liquidity deficient, so it cannot raise enough
https://www.rba.gov.au/publications/rdp/2019/2019-10/model-generalisations-and-extensions.html

Appendix A: Emergency Liquidity Injection Policies in Europe and the United States

9 Oct 2019 RDP 2019-10
Nicholas Garvin
The TAF, introduced in March 2007, lent to a wide range of depository institutions – in contrast to the standard open market operations that only transact with the 20 or so primary
https://www.rba.gov.au/publications/rdp/2019/2019-10/appendix-a.html

Liquidity Injection through Secured Lending

9 Oct 2019 RDP 2019-10
Nicholas Garvin
losing 1 – m liquidity through foregone sales, so to obtain one more unit of liquidity, borrowing must increase by 1/m. ... First, banks individually have no impact on the securities price, so a weakening of the collective impact does not factor into
https://www.rba.gov.au/publications/rdp/2019/2019-10/liquidity-injection-through-secured-lending.html