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بهرهدار
It is shown that expanding the reach of interest-bearing central bank liabilities increases welfare.
But, the negative effects of central bank asset purchases can be mitigated or eliminated if the central bank expands the reach of its interest-bearing liabilities by allowing unconventional banks to hold them.
But the market in government debt is segmented from other asset markets, so the substitution toward interest-bearing assets is irrelevant for consumption directly related to government debt.
For example, if the central bank permitted unconventional banks to hold reserve accounts, this could mitigate or possibly eliminate the problem, by expanding the reach of interest-bearing central bank liabilities.
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