Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
How Central Banks Are Using Tiered Reserve Systems
Episode 35 of Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates takes you inside the central bank toolkit for tiered reserve remuneration. Lucas and Luna explore how the European Central Bank's two-tier system for excess reserves works, why the Bank of Japan uses a three-tier structure, and what the Federal Reserve's decision to pay interest on reserves means for money markets. They break down the mechanics of tiering — how it can act as a stealth rate cut for banks while keeping the headline policy rate unchanged — and debate whether tiering is…
The skinny
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