Excess reserves and the new challenges for monetary policy

Abstract: Interest on reserves allows the Federal Reserve to pursue an appropriate monetary policy even with a high level of excess reserves. However, a banking system flush with excess reserves can raise the risk of monetary policy getting behind the curve.

Keywords: Inflation (Finance); Monetary policy;

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Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Richmond Fed Economic Brief

Publication Date: 2010

Issue: Mar

Order Number: 10-03