How Did the Fed Funds Market Change When Excess Reserves Were Abundant?

16 Pages Posted: 30 Jun 2020

See all articles by John McGowan

John McGowan

Federal Reserve Banks - Federal Reserve Bank of New York

Ed Nosal

Federal Reserve Banks - Federal Reserve Bank of Atlanta

Date Written: March 2020

Abstract

Prior to the 2007-2008 financial crisis, excess reserves in the U.S. banking system were scarce. After the financial crisis and up until early 2018, excess reserves were abundant. In this article, the authors document, analyze, and explain the differences in the performance of the federal funds market under the two different excess reserves frameworks.

Keywords: Federal Reserve, EFFR, abundant excess reserves, FBO, Federal Home Loan Banks, FHLB, effective fed funds rate, fed funds market, foreign banking organizations, monetary policy framework

JEL Classification: E4, E5, G2

Suggested Citation

McGowan, John and Nosal, Ed, How Did the Fed Funds Market Change When Excess Reserves Were Abundant? (March 2020). Economic Policy Review, Vol. 26, No. 1, Available at SSRN: https://ssrn.com/abstract=3634992 or http://dx.doi.org/10.2139/ssrn.3634992

John McGowan (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Ed Nosal

Federal Reserve Banks - Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

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