BONUS: George Selgin on the Fed Taper and Shrinking the Fed’s Balance Sheet
Macro Musings with David Beckworth
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Do You Think the Standing Repe Facility Will Really Change the Calculus of Demand for Reserves?
The standing repot facility would allow banks to hold Treasuries and government securities billsm more perfect, if not quite perfect, substitutes. When you have a standing reapof facility, you have a substitute for the old federal funds marketnow the fed funds market doesn't do a thing now. It's just an arbitrage arrangement where g s s and banks share interest unreserved. And that's as it should be.
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