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To whom does the Fed lend money?

Updated: 10/25/2022
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11y ago

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other banks.

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11y ago
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Q: To whom does the Fed lend money?
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The Fed encourages banks to loan more money by:Reducing the Cash Reserve Ratio (Money that needs to be deposited with the fed by every bank) This way banks have more cash to lend and hence they loan it to customersReducing Interest Rates - By reducing interest rates, loans become cheaper thereby prompting customers to take new loans which encourages banks to lend more loans in order to gain new business


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