4 ms·

How does this square with the fact that the reserve rate is now zero? https://www.investopedia.com/terms/r/requiredreserves.asp https://www.investopedia.com/te

• cowthulhu 4y ago
  Most banks are regulated by either the FDIC or NCUA, not the Fed. So the fed setting reserve rates doesn’t change anything for banks that, like, normal people use. Additionally, I think you’re viewing reserve rates as the only way banks measure liquidity, which is not the case. But, even if reserve requirements are zero, and banks are allowed to loan out every penny… they’re still not allowed to just make up money, that’s not how it works.
• Nursie 4y ago
  Reserve requirements are not the whole picture, there are also capitalisation requirements. The reserve rate is now zero because it's no longer the favoured mechanism. https://www.federalreserve.gov/supervisionreg/large-bank-capital-requirements.htm https://www.federalreserve.gov/supervisionreg/large-bank-cap...