Reserve Requirements: History,Current Practice, and Potential Reform
论文作者:Joshua N. Feinman,论文属性:短文 essay登出时间:2008-08-22编辑:点击率:3898
论文字数:5600论文编号:org200808221436433912语种:英语 English地区:英国价格:$ 22
关键词:Reserve RequirementsHistoryCurrent PracticePotential Reform
Joshua N. Feinman, of the Board’s Division of
Monetary Affairs, prepared this article. Jana
Deschler and Christoph Hinkelmann provided
research assistance.
Laws requiring banks and other depository institutions
to hold a certain fraction of their deposits in
reserve, in very safe, secure assets, have been a part
of our nation’s banking history for many years. The
rationale for these requirements has changed over
time, however, as the country’s financial system
has evolved and as knowledge about how reserve
requirements affect this system has grown. Before
the establishment of the Federal Reserve System,
reserve requirements were thought to help ensure
the liquidity of bank notes and deposits, particularly
during times of financial strains. As bank runs
and financial panics continued periodically to
plague the banking system despite the presence of
reserve requirements, it became apparent that
these requirements really had limited usefulness as
a guarantor of liquidity. Since the creation of the
Federal Reserve System as a lender of last resort,
capable of meeting the liquidity needs of the entire
banking system, the notion of and need for reserve
requirements as a source of liquidity has all but
vanished. Instead, reserve requirements have
evolved into a supplemental tool of monetary
policy, a tool that reinforces the effects of open
market operations and discount policy on overall
monetary and credit conditions and thereby helps
the Federal Reserve to achieve its objectives.
While useful as an auxiliary policy tool, reserve
requirements also have important implications for
the efficacy of the Federal Reserve’s primary tool,
open market operations. In the early 1980s, for
example, when open market operations were
geared toward fostering fairly precise, short-run
control of narrowly defined money (M1), reserve
requirements were designed to help facilitate this
control by establishing a relatively stable, contemporaneous
link between reserves and M1 deposits.
Although the Federal Reserve is no longer pursuing
this type of short-run control of money, reserve
requirements still play an important role in the
conduct of open market operations, which are now
aimed at influencing general monetary and credit
conditions by varying the cost and availability of
reserves to the banking system. By helping to
ensure a stable, predictable demand for reserves,
reserve requirements better enable the Federal
Reserve to achieve desired reserve market conditions
by controlling the supply of reserves; in so
doing, they help prevent potentially disruptive fluctuations
in the money market.
Reserve requirements are not costless, however.
On the contrary, requiring depositories to hold a
certain fraction of their deposits in reserve, either
as cash in their vaults or as non-interest-bearing
balances at the Federal Reserve, imposes a cost on
the private sector equal to the amount of forgone
interest on these reserves—or at least on the fraction
of these reserves that banks hold only because
of legal requirements and not because of the needs
of their customers. The higher the level of reserve
requirements, the greater the costs imposed on the
private sector; at the same time, however, higher
reserve requirements may smooth the implementation
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