Today, the Central Bank's Overnight Funding lending rate is 15.50% while the lending rate on LLW...

 

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Today, the Central Bank's Overnight Funding lending rate is 15.50% while the lending rate on LLW is 18.50%. Suppose that the CBRT reduces the lending limits (to banks) to provide less amount of liquidity via O/N funding (and other funding facilities except LLW) and pushes the banks to use the LLW to satisfy their funding needs. How this change affect the CBRT's weighted average cost of funding for banks? (5 points) Today, the Central Bank's Overnight Funding lending rate is 15.50% while the lending rate on LLW is 18.50%. Suppose that the CBRT reduces the lending limits (to banks) to provide less amount of liquidity via O/N funding (and other funding facilities except LLW) and pushes the banks to use the LLW to satisfy their funding needs. How this change affect the CBRT's weighted average cost of funding for banks? (5 points)

Answer rating: 100% (QA)

The CBRTs weighted average cost of funding for banks will increase as a result of th... View the full answer