Said in connection with a central bank’s reserve requirement policy. For a central bank to keep the overnight rate under control, there must be sufficient demand for deposits (credit balances) at the central bank. This demand is forcibly created through the medium of the fractional reserve. Because the demand thus created is stable and predictable, it also facilitates a central bank’s liquidity management. – See money creation willingness, minimum reserve requirement, interest rate corridor. – Cf. Monthly Report of the Deutsche Bundesbank of July 2004, pp. 55 f., Monthly Report of the ECB of October 2005, pp. 27 ff. (presentation; overviews).

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