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If Then
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I worked in 15 years in the financial industry from New York to Hong Kong. My main background was in structuring and financial engineering. Best description for me now is independent.
  • why can't Fed charge banks interest on the excess reserve?
     Have a question: Fed lowered the target fed fund rate to zero, but liquidity is trapped as commercial banks are keeping over $1trillion excess liquidity at the Fed instead of releasing it to the economy.

    Since the problem is not lack of liquidity, more Fed purchase of Treasury will not help. The problem is getting the trapped liquidity out, i.e. forcing banks to start to lend to business. So, I thought the most straightforward answer is for Fed to start charge interest on excess reserve (in a way, it is like to make interest rate negative). Why have this not been done? 
    Sep 21 9:32 PM | Link | 1 Comment
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