Questions tagged [reserve-requirement-ratio]

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55 views

Why does the Fed not fiddle with the reserve ratio?

We often hear in the news of the Fed changing the interest rate. Why do they not commonly alter the reserve ratio? Won't either be capable of expanding or contracting the money supply?
2
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1answer
32 views

How does the Federal Reserve reduce “excess reserves”?

Over the last few years, the amount of currency is circulation (and the corresponding liability on the Fed's balance sheet) has been growing; however, the asset side of the BS hasn't increased. By ...
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1answer
67 views

What physically happens when foreign currency reserves change?

Assume that the United States decided to hold more yuan in the federal reserve. Which processes does that involve? I assume there is some sort of electronic exchange between the two central banks ...
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0answers
18 views

Can a bank have deposits at another bank?

Can a bank create an account at another bank and get a loan in the form of deposits at that bank? If so, could these deposits at the other bank be used to satisfy the first bank's reserve/liquidity ...
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2answers
32 views

Allowing the reserve requirements drop to zero

On 15 March 2020, the Federal Reserves announced that it would cut its benchmark rate to near zero and that it would also reduce the reserve requirements ratio to zero percent. This is part of its ...
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1answer
26 views

Can setting bank's reserve requirement ratio in 100% simulate gold standard?

Statement: If you want a gold standard, it's easier to set bank's reserve requirement to 100%. Context: This was a comment in a video telling how government actions influence monetary inflation. ...
0
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1answer
22 views

Why do banks keep vault cash instead of depositing all reserves at the central bank?

In what way to commercial banks benefit from keeping some of their excess reserves in the vault as opposed to depositing all of their excess reserves with the central bank (assuming the central bank ...
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0answers
8 views

bank lending channel and bank capital channel: mechanism step by step

In any definition of these concepts, I miss the first step: how exactly does expansionary or contractionary (rate changes, req. reserve changes, ... ) monetary policy affect bank deposits and bank ...
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0answers
9 views

Japanese savings glut vs capital adequacy issues in 1990s

If Japan had a huge savings glut in the 1990s, even during the financial downturn years, why were traditional banks and lenders struggling to meet the new capital adequacy requirements, under the 'Big ...