I thought the only reason that banks had excess reserves was due to the fed paying 50 basis points of interest. This was the fed's way of preventing +/-$2.28 T

I thought the only reason that banks had excess reserves was due to the fed paying 50 basis points of interest. This was the fed's way of preventing +/-$2.28 Trillion [1] from being loaned out thus adding $2.28 trillion x (fractional reserve rate...10 if mandatory reserves were 10%) to the money supply through lending. With negative interest rates excess reserves again become an expense, therefore removing banks disincentive to lend. [1] https://research.stlouisfed.org/fred2/series/EXCSRESNS https://research.stlouisfed.org/fred2/series/EXCSRESNS [2] https://en.wikipedia.org/wiki/Fractional-reserve_banking https://en.wikipedia.org/wiki/Fractional-reserve_banking