Understanding Central Bank Reserves and Liquidity Management

The chapter delves into the mechanisms of central bank reserves, focusing on the Asset Purchase Facility (APF) in the UK and its financial implications. It highlights the financing of the APF, the impact of quantitative easing on cash transfers, and strategies for unwinding the facility. The discussion also includes Q&A on bank balance sheet volatility, reserve remuneration, and factors influencing central bank balance sheet size.