June Fed moments — banking institutions may use T-Bills as security for extra reserves

The minutes through the June 18-19 Fed meeting show that the Fed is considering banks that are allowing utilize security, such as for instance T-Bills for extra reserves. They have been considering installing a repo center that really leads to banking institutions just publishing T-Bills alternatively of money for extra reserves. The moments expose range benefits and drawbacks because of the approach. It will be a good idea to have banks only post T-Bills for extra reserves above $20 billion.

There is lots of conversation regarding just how much extra reserves is desirable considering that, pre-crisis, excess reserves had been little.

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