The effect of interest on reserves on monetary policy

In October 2008 the Federal Reserve began paying banks interest on the reserves they hold. This action was intended to remove the implicit, distortionary tax that reserve requirements impose on banks, as well as help the Fed maintain the fed funds rate at its target. Going forward, interest on reserves is likely to simplify monetary policy implementation, as well as allow the Fed to pursue separate monetary and credit policies.

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Year of publication:	2009
Authors:	Walter, John R. ; Courtois, Renee
Published in:	Richmond Fed Economic Brief. - Federal Reserve Bank of Richmond. - 2009, Dec, 09-12
Publisher:	Federal Reserve Bank of Richmond
Subject:	Inflation (Finance) \| Monetary policy

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Extent:	application/pdf
Type of publication:	Article
Language:	English
Source:	RePEc - Research Papers in Economics

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