The moments through the June 18-19 Fed conference show that the Fed is considering permitting banking institutions to utilize security, such as for example T-Bills for excess reserves. These are typically considering creating a repo center that really leads to banking institutions merely publishing T-Bills alternatively of money for extra reserves. The moments reveal wide range of benefits and drawbacks using the approach. It will be a good idea to have banks only post T-Bills for extra reserves above $20 billion.
There’s been plenty of conversation regarding simply how much extra reserves is desirable considering that, pre-crisis, excess reserves had been little. Continue reading