Michael Reddell: Remunerating exchange settlement accounts: what is MoF up to?

A few weeks ago I wrote a post about an article the Herald’s Jenee Tibshraeny had written based on an interview she’d done with the Minister of Finance. Willis was reported as toying with a number of fairly questionable ideas around the Reserve Bank (none involving actually replacing the Board chair). One of those involved the interest rate paid on banks’ settlement account balances at the Reserve Bank. Those balances are currently high (something that is entirely determined by the Reserve Bank; banks themselves can influence only the distribution of the aggregate balances among them).

I wrote then