Sentences with phrase «interest on bank reserves so»

At TSI over the past year and at the TSI Blog two months ago I've made the point that the Fed gave itself the ability to pay interest on bank reserves so that the Fed Funds Rate (FFR) could be raised without the need to shrink bank reserves and the economy - wide money supply.

Not exact matches

It has done this by offering attractive interest rates on banks» reserves held at the Fed, so the banks keep their excess funds there instead of lend them out to borrowers in the economy.

For one, banks get zero interest on required reserves — the assets they must keep on hand to meet depository obligations — so no issue there.

Because the stock of reserves is so high, central banks pay «interest on reserves» (IOR) to influence market interest rates.

It has done so by introducing three distinct interest rates on reserves: required reserves — which banks must hold — these are paid zero, and are relatively small in quantity; existing reserves — these are now paid 10bps; and a new third tier — a «policy balance» which will be paid minus 10bps.

Banks are sitting on such vast quantities of excess reserves — paid to do so by the Federal Reserve as it pays a relative high interest rate on reserves — that the monetary base is larger than M1.

Instead, when the Fed makes its first rate hike — something that probably won't happen until at least September - 2015 — it will do so by 1) raising the interest rate paid on bank reserves, 2) increasing the amount that it pays to borrow money via Reverse Repurchase agreements, and 3) boosting the rate that it offers to financial institutions for term deposits.

In a floor system, banks are kept flush with excess reserves, and monetary control is exercised, not be adjusting the quantity of reserves so as to achieve a particular equilibrium federal funds rate, but by manipulating the interest rate the Fed pays on banks» required and excess reserves holdings, alone or along with the Fed's overnight reverse - repo (ON - RRP) raton banks» required and excess reserves holdings, alone or along with the Fed's overnight reverse - repo (ON - RRP) ratON - RRP) rate.

So with the transfer window just around the corner and with the Arsenal shareholder Lord Harris having helpfully told the world that the club is sitting on cash reserves of something like # 200 million in the bank, Arsene Wenger is concerned that the price of any player he is interested in will suddenly go up, as explained in a Daily Mail report.

Just like you said for Ponzi schemes «the only source of the so - called interest on the money was the contributions of future investors», for fractional - reserve banking the source of interest is the future profit made by lending the investor's money - to the investors themselves!

the most truly inconvenient truth is that the world's economic system, which is based on fractional reserve banking (which essentially allows for printing money whenever a government chooses to do so, independent of any real productive value underlying the printed currency), which then requires constant growth to pay the interest on ever increasingly debt on the new «money» that is then used to create loans or government financing of whatever.