Why are banks holding so many excess reserves?
Todd Keister () and
James McAndrews ()
Current Issues in Economics and Finance, 2009, issue dec
The buildup of reserves in the U.S. banking system during the financial crisis has fueled concerns that the Federal Reserve's policies may have failed to stimulate the flow of credit in the economy: banks, it appears, are amassing funds rather than lending them out. However, a careful examination of the balance sheet effects of central bank actions shows that the high level of reserves is simply a by-product of the Fed's new lending facilities and asset purchase programs. The total quantity of reserves in the banking system reflects the scale of the Fed's policy initiatives, but conveys no information about the initiatives' effects on bank lending or on the economy more broadly.
Keywords: Bank reserves; Federal Reserve System; Inflation (Finance); Liquidity (Economics) (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (69) Track citations by RSS feed
Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/rese ... t_issues/ci15-8.html (text/html)
Working Paper: Why are banks holding so many excess reserves? (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fip:fednci:y:2009:i:dec:n:v.15no.8
Ordering information: This journal article can be ordered from
Access Statistics for this article
More articles in Current Issues in Economics and Finance from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Amy Farber ().