Title

Raising interest rates: IOER vs. OMO: Interest on excess reserves vs open market operations

DOI

10.5430/ijfr.v9n1p142

Document Type

Journal Article

Publication Date

1-1-2018

Publication Title

International Journal of Financial Research

Volume

9

Issue

1

First Page

142

Last Page

146

ISSN

19234023

Keywords

Banking policy, Monetary policy

Abstract

We demonstrate that IOER should make the excess reserves even larger, continuing the problem of monetary policy control and rewarding the banks for their policy errors fostering the Great Recession by giving them risk free returns on the $2.5 trillion of idle funds that are benefiting no one except the banks themselves, or having the banks invest those idle funds in some useful manner such as helping finance the government deficit and fix our roads and bridges. The number 1 priority should be to get rid of the troublesome excess reserves and utilizing open market operations (OMO).

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