##ity management framework includes the appropriate mix of market operations and standing facilities to maintain ample liquidity in the cash system. figure 1. settlement cash level as of 30 september 2024 source : rbnz d12 table _ _ _ _ _ _ _ _ _ _ _ _ see callaghan et al. ( 2023 ) for further details on settlement cash and the impact of the covid response on the settlement cash level. see this rba explainer. moving from ‘ abundant ’ to ‘ ample ’ settlement cash to illustrate the transition to a lower settlement cash level, figure 2 shows a stylised representation of the demand curve for settlement cash. the greater the settlement cash level, the lower the interest rate, within the bounds imposed by our standing facilities. settlement cash currently sits within the ‘ abundant ’ region, where we would expect to see short - term interest rates being less responsive to modest movements in the settlement cash level. figure 2. scarce, ample, and abundant settlement cash interest rate scarce ample abundant overnight reverse repo facility settlement cash demand interest on esas balances ( paid at ocr ) settlement cash level source : rbnz note : the demand curve does drop below the ocr in this chart at the very highest levels of settlement cash. this captures the ‘ leaky floor ’ effect, where short - term interest rates in some markets can still drop below the ocr if settlement cash is highly abundant. this is discussed in more detail in callaghan et al. ( 2023 ). more active management of settlement cash is required by the reserve bank at our intended ample level. a decline back into scarce levels would result in short - term interest rates rising above the ocr. this occurs because market participants would be willing to pay more for settlement cash to meet their liquidity needs. this would result in small movements in settlement cash causing large movements in short - term interest rates14 our intention to maintain settlement cash at an ample level is an easy statement to make. however, what constitutes an ample level is uncertain and may change over time. there is also no historical precedent for the level of decline in settlement cash that is underway. current internal estimates of ample carry a wide range, reflecting the inherent uncertainty surrounding the many factors that can influence the demand for settlement cash. as a consequence, we do not intend to publish a point estimate of ample but will monitor indicators and market intelligence to maintain it. to borrow a phrase, we will know the ample settlement cash level by its works. _

market tools and market - like incentives wherever possible, by using banks ’ own policies, behaviors, and technologies in improving the supervisory process. finally, we should always remind ourselves that supervision and regulation are neither infallible nor likely to prove sufficient to meet all our intended goals. put another way, the basle standard and the bank examination process, even if both are structured in optimal fashion, are a second line of support for bank soundness. supervision and regulation can never be a substitute for a bank ’ s own internal scrutiny of its counterparties, as well as the market ’ s scrutiny of the bank. therefore, we should not, for example, abandon efforts to contain the scope of the safety net, or to press for increases in the quantity and quality of financial disclosures by regulated institutions. if we follow these basic prescriptions, i suspect that history will look favorably on our attempts at crafting regulatory policy.