{
  "title": "Monetary Policy with a touch of Basel",
  "publication": "IMF Working Papers, October 1, 2001",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/monetary-policy-with-a-touch-of-basel-15381",
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  "summary": "The typical portrait of monetary policy has the banks and the money supply being manipulated through changes in bank reserves. However, with only a small portion of bank deposits now subject to reserve requirements, an alternative explanation of how monetary policy influences banks is needed.",
  "sections": [
    {
      "heading": "Authors and publication",
      "content": "- By Ralph Chami, Thomas F. Cosimano\n- October 1, 2001\n- IMF Working Papers, Working Paper No. 2001/151\n- Issue: 151\n- Volume: 2001\n- Pages: 47\n- DOI: https://doi.org/10.5089/9781451857030.001\n- Stock No: WPIEA1512001\n- ISBN: 9781451857030\n- ISSN: 1018-5941\n- Citation example (from source): Ralph Chami, and Thomas F. Cosimano \"Monetary Policy with a touch of Basel\", IMF Working Papers 2001, 151 (2001), accessed 9/9/2026, https://doi.org/10.5089/9781451857030.001"
    },
    {
      "heading": "Central thesis",
      "content": "- The traditional view that monetary policy operates mainly by manipulating bank reserves is less applicable when only a small portion of bank deposits are subject to reserve requirements.\n- Over the last decade, capital requirements have effectively replaced reserve requirements as the main constraint on the behavior of banks.\n- The paper identifies a \"bank balance-sheet channel\" of monetary policy, which operates through the impact on the money stock and the economy."
    },
    {
      "heading": "Key findings and concepts",
      "content": "- Capital requirements (Basel) have become the predominant constraint shaping bank behavior in place of reserve requirements.\n- The \"bank balance-sheet channel\" is a distinct mechanism through which monetary policy affects banks, the money stock, and economic activity.\n- Subjects covered include: Bank credit; Banking; Basel Core Principles; Capital adequacy requirements; Deposit rates; Financial institutions; Financial regulation and supervision; Financial services; Loans; Money."
    },
    {
      "heading": "Keywords and analytical focus",
      "content": "- accelerator effect\n- bank behavior\n- bank capital\n- Bank credit\n- banking industry\n- Basel Core Principles\n- Capital adequacy requirements\n- capital constraint\n- capital requirements\n- Deposit rates\n- Global\n- loan rate\n- Loans\n- monetary policy\n- WP"
    },
    {
      "heading": "Policy implications and relevance",
      "content": "- Monetary policy analysis should account for capital adequacy constraints when assessing how policy changes propagate through banks to the money stock and the real economy.\n- Basel capital requirements alter the transmission mechanism of monetary policy, implying that traditional reserve-focused frameworks may be insufficient for policy design and evaluation.\n\nSource: IMF Working Paper \"Monetary Policy with a touch of Basel\" (Ralph Chami and Thomas F. Cosimano), October 1, 2001.\n\n---\n\n Content in this bundle\n\n- Monetary Policy with a Touch of Basel - WP/01/151\n  - Monetary Policy with a Touch of Basel - WP/01/151 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Monetary Policy with a Touch of Basel - WP/01/151 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/monetary-policy-with-a-touch-of-basel-15381"
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    "Authors: Ralph Chami, Thomas F. Cosimano",
    "Published: October 1, 2001",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451857030.001",
    "By Ralph Chami, Thomas F. Cosimano",
    "October 1, 2001",
    "IMF Working Papers, Working Paper No. 2001/151",
    "Issue: 151",
    "Volume: 2001",
    "Pages: 47",
    "DOI: https://doi.org/10.5089/9781451857030.001",
    "Stock No: WPIEA1512001",
    "ISBN: 9781451857030",
    "ISSN: 1018-5941",
    "Citation example (from source): Ralph Chami, and Thomas F. Cosimano \"Monetary Policy with a touch of Basel\", IMF Working Papers 2001, 151 (2001), accessed 9/9/2026, https://doi.org/10.5089/9781451857030.001",
    "The traditional view that monetary policy operates mainly by manipulating bank reserves is less applicable when only a small portion of bank deposits are subject to reserve requirements.",
    "Over the last decade, capital requirements have effectively replaced reserve requirements as the main constraint on the behavior of banks.",
    "The paper identifies a \"bank balance-sheet channel\" of monetary policy, which operates through the impact on the money stock and the economy.",
    "Capital requirements (Basel) have become the predominant constraint shaping bank behavior in place of reserve requirements.",
    "The \"bank balance-sheet channel\" is a distinct mechanism through which monetary policy affects banks, the money stock, and economic activity.",
    "Subjects covered include: Bank credit; Banking; Basel Core Principles; Capital adequacy requirements; Deposit rates; Financial institutions; Financial regulation and supervision; Financial services; Loans; Money.",
    "accelerator effect",
    "bank behavior",
    "bank capital",
    "Bank credit",
    "banking industry",
    "Basel Core Principles",
    "Capital adequacy requirements",
    "capital constraint",
    "capital requirements",
    "Deposit rates",
    "Global",
    "loan rate",
    "Loans",
    "monetary policy",
    "WP",
    "Monetary policy analysis should account for capital adequacy constraints when assessing how policy changes propagate through banks to the money stock and the real economy.",
    "Basel capital requirements alter the transmission mechanism of monetary policy, implying that traditional reserve-focused frameworks may be insufficient for policy design and evaluation.",
    "**Monetary Policy with a Touch of Basel - WP/01/151**"
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