DP818 | Reflections on the Emergence of a Single Market for Bank Reserves in a European Monetary Union


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The emergence of a single interbank market for reserves in the EC following monetary union raises a basic dilemma for policy. Either competition is allowed to decide the location of the interbank market and the national central banks will enter the competition, or the location of this market is decided collectively from the start, but a uniform blueprint of central banking must be adopted. The sources of this dilemma and its consequences are analysed in this paper.