4 ms·
It doesn't matter because no banks have been anywhere near the reserve requirements that were previously in effect. The change to the "ample reserves" regime is
by NovemberWhiskey 5y ago
It doesn't matter because no banks have been anywhere near the reserve requirements that were previously in effect. The change to the "ample reserves" regime is just a tacit admission that lending is not functionally limited by reserve ratios in the U.S. at the moment.
- mgraczyk 5y agoYep that's what I meant by "hasn't mattered for a long time".
- NovemberWhiskey 5y agoI'm sure you know, but (based on discussions that took place at the time of the announcement back in 2020) I know a lot of people who leapt directly to the assumption that the removal of the reserve requirement was so that banks could "create even more money out of thin air than they were previously allowed to do". I hope you don't mind me clearing that misconception up, even if it's not for your benefit!