How will the payment of interest on reserve balances be administered?
Detailed answers to questions about how the payment of interest on reserve balances will be administered and interest payments calculated can be found on the the Federal Reserve System Reporting and Reserves website. What’s most critical for the implementation of monetary policy is that interest will be paid on the excess balances depository institutions hold, i.e., the amount above the quantity of balances needed to satisfy their reserve requirements (which will also be remunerated), and their clearing balances (which will continue to earn implicit interest in the form of earnings credits).
Related Questions
- Why is the payment of interest on reserve balances, and on excess balances in particular, especially important under current conditions?
- How are required reserve balances and excess balances for interest payment calculations determined?
- How will the payment of interest on reserve balances be administered?
