Overbidding in fixed rate tenders: The role of exposure risk

► The fixed rate tender is one of the main procedures used by central banks. ► Prior research has often dismissed the procedure for encouraging overbidding. ► We consider an auction-theoretic setting with declining marginal valuations. ► Due to exposure risk, an equilibrium exists even if the amount is pre-announced. ► Proxies of exposure risk are significant in both euro and sterling operations.