The Board of Governors of the Federal Reserve System is requesting comment on the proposal to lower the interest rate on excess balances of eligible institutions that hold a very large proportion of their assets in the form of reserves—i.e., on balances of ‘The Narrow Bank.’ The document states that [t]he Board is concerned that [Pass-Through Investment Entities] PTIEs, by maintaining all or substantially all of their assets in the form of balances at Reserve Banks and having the ability to attract very large quantities of deposits at a near-IOER rate, have the potential to complicate the implementation of monetary policy.
Topics:
Dirk Niepelt considers the following as important: Federal Reserve, Interest on reserves, Narrow banking, Notes, The Narrow Bank USA
This could be interesting, too:
Marc Chandler writes Sterling and Gilts Pressed Lower by Firmer CPI
Marc Chandler writes FX and Rates Unwind Yesterday’s Powell Effect, US Index Futures Slide
Marc Chandler writes FX Becalmed Ahead of the Weekend and Next Week’s Big Events
Marc Chandler writes Continued Backing Up of US Rates Extend the Greenback’s Gains
The Board of Governors of the Federal Reserve System is requesting comment on the proposal to lower the interest rate on excess balances of eligible institutions that hold a very large proportion of their assets in the form of reserves—i.e., on balances of ‘The Narrow Bank.’
The document states that
[t]he Board is concerned that [Pass-Through Investment Entities] PTIEs, by maintaining all or substantially all of their assets in the form of balances at Reserve Banks and having the ability to attract very large quantities of deposits at a near-IOER rate, have the potential to complicate the implementation of monetary policy.