0
This is mainly because of two things. Reserve requirements where phased out from deposits in savings accounts in the 1980's and 1990's. In 1994 banks were allowed to start sweeping money from transaction accounts into savings accounts, enabling them to avoid a large part of the reserve requirements that are still in place for transaction accounts.
Paul Bennett and Stavros Peristiani wrote in 2002:1
The Federal Reserve requires U.S. commercial banks and other depository institutions to hold a minimum level of reserves in proportion to certain liabilities. On occasion, the central bank has reduced reserve requirements-such as in 1990, when requirements on large time deposits were dropped, and in 1992, when requirements on transaction accounts were reduced. In addition, more and more banks since 1994 have used computer technologies that temporarily "sweep" deposits from one type of account to another, thereby reducing required reserve levels. 1Paul Bennett and Stavros Peristiani: "Are U.S. Reserve Requirements Still Binding?", FRBNY Economic Policy Review [http://www.ny.frb.org/research/epr/02v08n1/0205benn/0205benn.html]
What else can I help you with?
The of the Federal Reserve has the power to raise or lower the reserve requirements of member banks?
board of government
Which of the following factors does not reduce the Federal Reserve's control of the money supply?
The factor that does not reduce the Federal Reserve's control of the money supply is the ability to set reserve requirements for banks.
What requirements banks must meet under a fractional reserve banking system?
banks must keep a specific percentage of deposits on hand.
Occasionally banks cannot meet their reserve requirements if customers deposit large amounts of money?
false
Why does the Federal Reserve require commercial banks to have reserves?
To ensure that banks maintain a minimum amount of cash to meet the cash withdrawal requirements of its customers
The of the Federal Reserve has the power to raise or lower the reserve requirements of member banks?
board of government
The president of the Federal Reserve has the power to raise or lower the reserve requirements of member banks?
no the board of governors
What banks are subject to reserve requirements?
In the U.S., all banks which are insured by the FDIC are subject to those requirements. All other banks can do whatever they want, but most consider these banks shady.
What are the reserve requirements in reference to the federal reserve policy?
Reserve requirements refer to the amount of funds that banks must hold in reserve against deposits made by customers, as mandated by the Federal Reserve. This policy aims to ensure that banks maintain sufficient liquidity to meet customer withdrawals and promote stability in the banking system. The Federal Reserve can adjust these requirements to influence the money supply and overall economic activity. Lowering reserve requirements can encourage lending and spending, while increasing them can help curb inflation.
What would most likely happen if the federal reserve decided to increase the reserve requirements in banks?
If the Federal Reserve decided to increase the reserve requirement in banks, it is likely that banks would be targeted more often for robbery. This would be because there would be more money in every federally-insured bank.
Which of the following factors does not reduce the Federal Reserve's control of the money supply?
The factor that does not reduce the Federal Reserve's control of the money supply is the ability to set reserve requirements for banks.
What requirements banks must meet under a fractional reserve banking system?
banks must keep a specific percentage of deposits on hand.
What tools does the government use to regulate and keep banks from overextending?
The government employs several tools to regulate banks and prevent overextension, including capital requirements, reserve requirements, and stress testing. Capital requirements mandate that banks maintain a certain level of capital relative to their assets, ensuring they have a buffer against losses. Reserve requirements dictate the minimum amount of funds banks must hold in reserve, limiting the amount they can lend. Additionally, regular stress tests assess banks' ability to withstand economic downturns, ensuring they remain stable during financial crises.
Occasionally banks cannot meet their reserve requirements if customers deposit large amounts of money?
false
Why does the Federal Reserve require commercial banks to have reserves?
To ensure that banks maintain a minimum amount of cash to meet the cash withdrawal requirements of its customers
Who has the power to determine what the margin requirement will be for the member banks?
Usually the Central Banks of each country decide such margin requirements. Ratios like Cash Reserve Ratio, Liquidity Ratio etc are set by the Central Banks like Reserve Bank of India or Federal Reserve of USA. All member banks are expected and supposed to follow these guidelines set by the central banks.
How could the fedreal reserve encourage banks to lend out more of their reserve?
The Federal Reserve can encourage banks to lend more of their reserves by lowering the federal funds rate, which reduces the cost of borrowing and incentivizes banks to extend more loans. Additionally, the Fed can implement quantitative easing, purchasing government securities to increase the money supply and provide banks with more liquidity. Lastly, adjusting reserve requirements to lower percentages allows banks to keep less money on reserve, freeing up capital for lending.
