The mins through the June 18-19 Fed conference show that the Fed is considering banks that are allowing make use of collateral, such as for example T-Bills for extra reserves. These are typically considering creating a repo center that really leads to banking institutions merely posting T-Bills rather of cash for excess reserves. The moments expose range advantages and disadvantages aided by the approach. It might be a good idea to have banks only post T-Bills for extra reserves above $20 billion.
There is plenty of conversation regarding simply how much extra reserves is desirable considering that, pre-crisis, excess reserves had been tiny. Really there clearly was only “required reserves” and banks having a little additional were lending it to the ones that wanted or required a tad bit more. Read more