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June Fed moments — banking institutions can use T-Bills as security for extra reserves

Tuesday, August 4th, 2020

June Fed moments — banking institutions can use T-Bills as security for extra reserves

The moments through the June 18-19 Fed conference show that the Fed is considering enabling banking institutions to utilize security, such as for instance T-Bills for extra reserves. They truly are considering starting a repo center that really leads to banking institutions t-Bills that are simply posting of cash for extra reserves. The mins expose a true amount of advantages and disadvantages aided by the approach. It might be smart to have banks only post T-Bills for extra reserves above $20 billion.

There’s been plenty of conversation regarding just how much reserves that are excess desirable considering that, pre-crisis, excess reserves had been tiny. Really there clearly was only “required reserves” and banks by having a little additional were lending it to those who wanted or required a bit more. (more…)