They dont loan out their excess reserves. They only have excess
reserves because
they dont have loan demand from qualified borrowers and the
marginal return from
an average loan is greater than the interest paid on the excess
reserves. IE they have to receive a marginal return of X amount
above .25% they now receive on their
excess reserves from a borrower SO
1. They have to loan demand
2. Qualified borrower
3. Net marginal return of higher than the amount of interest
they receive on their reserves.