(RBA 2007, Central Bank Market Operations, pp.27) However this level can vary from time to time when banks need more or less cash, depending on supply and demand.
At times when ADI’s require more or less cash the RBA responds by adjusting the amount it provides in order to balance the supply and demand... Showed first 250 characters
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If supply is too high, holders of ES funds will wish to lend their excess funds in the overnight market, putting downward pressure on the cash rate, whereas if supply is too low they will wish to borrow putting upward pressure on the rate. When the RBA makes payments, the payments represent new deposits with ADI’s adding to the aggregate ES funds, just as when payments are made to the government by the ADI’s there is a reduction in the aggregate level of ES funds... Showed next 250 characters
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