The mins through the June 18-19 Fed conference show that the Fed is considering banks that are allowing make use of security, such as for instance T-Bills for extra reserves. They have been considering starting a repo facility that really leads to banking institutions t-Bills that are simply posting of money for extra reserves. The moments reveal a true amount of 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 plenty of conversation regarding simply how much extra reserves is desirable considering that, pre-crisis, excess reserves had been little.Read More »June Fed mins — banks may use T-Bills as security for extra reserves