1. Monetary Policy and the Econom
... ;must retain a percentage of certain types of deposits to be held as reserves. The Federal Reserve under the Depository Institutions Deregulation and Monetary Control Act of 1980 sets the reserve requirements. At the end of 1993, 4,148 member banks, 6,042 nonmember banks, 495 branches and agencies ... earn interest; nonetheless, the demand for these reserves can fluctuate greatly over short periods, complicating the Federal Reserve's task of implementing monetary policy. Supply of Reserves The Federal Reserve supplies reserves to the banking system in two ways: Lending through the Federal...
- Word Count: 4049
- Approx Pages: 16
- Grade Level: Undergraduate