Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
How Central Banks Use Reserve Requirements as a Policy Tool
In Episode 47 of Monetary Policy Explained with Fexingo, Lucas and Luna dive into the often-overlooked tool of reserve requirements. Once a cornerstone of central banking, reserve requirements have fallen out of favor in many advanced economies — but not everywhere. Lucas explains how the Fed, ECB, and People's Bank of China have diverged on this tool, and why a 0% requirement doesn't mean zero policy impact. They explore the mechanics of required reserve ratios, the multiplier effect, and how China has used reserve requirement ratio (RRR) cuts to inject liquidity — including a…
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