Important Notice: Our web hosting provider recently started charging us for additional visits, which was unexpected. In response, we're seeking donations. Depending on the situation, we may explore different monetization options for our Community and Expert Contributors. It's crucial to provide more returns for their expertise and offer more Expert Validated Answers or AI Validated Answers. Learn more about our hosting issue here.

Why does the Federal Reserve want to pay interest on required reserve balances?

0
Posted

Why does the Federal Reserve want to pay interest on required reserve balances?

0

The inability to pay interest on balances held to satisfy reserve requirements essentially imposes a tax on depository institutions equal to the interest that might otherwise have been earned by investing those balances in an interest-bearing asset. Paying interest on required reserve balances effectively eliminates this tax.

Related Questions

What is your question?

*Sadly, we had to bring back ads too. Hopefully more targeted.

Experts123