Graph of the Day

Isn’t it time for the Fed to consider eliminating interest payments on excess reserves?

One response to “Graph of the Day

  1. Required reserves never increased during the 1990s and early 2000s while bank lending increased substantially:

    http://research.stlouisfed.org/fred2/series/REQRESNS?cid=123

    The existence of excess reserves right now is no indication that banks aren’t lending.

    Banks cannot extinguish aggregate excess reserves in any material way. They can only shuffle it amongst themselves. Only the FED can have a significant impact on the amount of excess reserves right now.

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