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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Ilaine who wrote (79773)3/13/2001 4:31:26 PM
From: John Pitera  Read Replies (1) of 436258
 
what's the problem if the Fed decides to pay interest on reserves held at Reserve banks? I think they've talked
about doing this on and off for several years.

To prevent the sum of required reserve and contractual clearing balances from falling even lower
and to diminish the incentives for depositories to engage in wasteful reserve-avoidance activities,
the Federal Reserve has sought authorization to pay interest on required reserve balances and to
pay explicit interest on contractual clearing balances.
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