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This is the second time I've seen this link come up recently. It is describing the banking system in the UK, which has no reserve requirement. The US, on the
by haberman 11y ago
This is the second time I've seen this link come up recently. It is describing the banking system in the UK, which has no reserve requirement. The US, on the other hand, does: https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm
- forgetsusername 11y ago>which has no reserve requirement The banks are not reserve constrained, so the reserve requirement is nigh irrelevant.
- digi_owl 11y agoThat can easily be bypassed by usage of the discount window. https://en.wikipedia.org/wiki/Discount_window https://en.wikipedia.org/wiki/Discount_window
- haberman 11y agoYour own link says this at the bottom of the introduction: > In recent years, the discount rate has been approximately a percentage point above the federal funds rate (see Lombard credit). Because of this, it is a relatively unimportant factor in the control of the money supply and is only taken advantage of at large volume during emergencies.
- digi_owl 11y agoAnd in recent years the economy in general have been on life support. No lending, no need for the discount window to line up the numbers.