2020-02-07 10:50

I observed a year ago that post-crisis bank regulation amounted to the Fed admitting that it was a failure, with banks treating reserves like pre-1913 banks treated gold. So I’m pleased to see that at least some Fed officials understand that this is a problem.

it is worth remembering that a principal reason for the Federal Reserve’s creation was to facilitate the movement of reserves when needed from banks with an excess reserve position to those in need of reserves

Source: Federal Reserve Board – The Economic Outlook, Monetary Policy, and the Demand for Reserves