Falling Reserve Balances and the Federal Funds Rate
6 Pages Posted: 11 Jul 2007
Date Written: April 1997
Abstract
The growth of 'sweeps' - a banking practice in which depository institutions shift funds out of customer accounts subject to reserve requirements - has reduced the required balances held by banks in their accounts at the Federal Reserve. This development could lead to greater volatility in the federal funds rate as banks try to manage their accounts with very low balances. An analysis of the evidence suggests that the volatility of the funds rate is rising slightly, but not enough to disrupt the federal funds market or affect the implementation of monetary policy.
Keywords: reserve requirements, sweep accounts
JEL Classification: E5
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Microstructure of the Euro Money Market
By Philipp Hartmann, Michele Manna, ...
-
The Microstructure of the Euro Money Market
By Philipp Hartmann, Michele Manna, ...
-
The Microstructure of the Euro Money Market
By Philipp Hartmann, Michele Manna, ...
-
Day-to-Day Monetary Policy and the Volatility of the Federal Funds Interest Rate
By Leonardo Bartolini, Giuseppe Bertola, ...
-
Day-to-Day Monetary Policy and the Volatility of the Federal Funds Interest Rate
By Leonardo Bartolini, Giuseppe Bertola, ...
-
The ECB Monetary Policy Strategy and the Money Market
By Vitor Gaspar, Gabriel Perez-quiros, ...
-
A Model of Target Changes and the Term Structure of Interest Rates
By Pierluigi Balduzzi, Giuseppe Bertola, ...
-
A Model of Target Changes and the Term Structure of Interest Rates
By Pierluigi Balduzzi, Giuseppe Bertola, ...