This interest bearing account offers a higher yield which makes it a great place to
keep excess funds that you need to access quickly.
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.
If you don't like
keeping excess funds in your checking account, it does not make sense to pay a premium to bank with an institution that charges you for moving money around.
Not exact matches
By paying interest on
excess reserves (IOER), the Fed rewards banks for
keeping balances beyond what they need to meet their legal requirements; and by making overnight reverse repurchase agreements (ON - RRP) with various GSEs and money - market
funds, it gets those institutions to lend
funds to it.
In the meantime, he may be trusting that U.S. financial institutions with $ 1.9 trillion of
excess reserves —
funded wholly by the Fed's quantitative easing — will
keep banks afloat with enough of a cushion to withstand any coming storm.
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) rate.
Moreover, by
keeping short - run interest rates near zero for more than seven years, paying interest on
excess reserves (IOER) above the effective fed
funds rate, and convincing markets that rates would stay low for a long time (forward guidance), the Fed has increased the reach for yield and appears more interested in priming Wall Street than in letting markets set interest rates and allocate credit.
Mercury is a health concern — in
excess it can cause neurological issues — but
keep in mind that all fish contains traces of this metal, since it's in our water, notes Tim Fitzgerald, director of impact at the Environmental Defense
Fund's Fishery Solutions Center.
They may simply be trying to
keep the price of the
fund in the ~ $ 15 a share range; I suspect (but don't know) that some
funds have in their charter a requirement to stay in a particular range and dividend
excess value.
These include paying banks to
keep funds parked with the Fed (called «Interest On
Excess Reserves») or though a different, more complex method of swapping Fed - held debt for bank cash holdings (called a «Reverse Repo» agreement).
I don't want to
keep the
excess money i.e. Rs3, 50,000 ideally (after emergency
fund) in my salary account as this will only get 4 % interest.