These developments are behind proposals recently presented in Jackson Hole by Duffie and Krishnamurthy (2016) and by Greenwood, Hanson and Stein (2016) which stress the importance of the Fed’s reverse repo programme (RRP).13 In the first paper, the programme would be used to involve more counterparties and affect several interest rates, thereby contributing to a better transmission of monetary policy, in view of the limits to arbitrage hampering the pass-through from short- to long-term interest rates.
As part of this responsibility, the Bank also gives advice to the Department of Finance on these issues, as well as on issues that have arisen in the context of the financial crisis.