Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
Why Central Banks Prefer Zero Interest On Reserves
Most people think central banks raise rates to make borrowing expensive. But the real lever they pulled after the pandemic was something far more subtle: paying banks to hold onto cash. This episode dissects the mechanics of Zero Interest on Reserves, explaining why the Federal Reserve and European Central Bank stopped paying interest in 2026. We break down how this policy shift impacts bank profitability, the money multiplier, and your savings account yields in the current economic landscape.
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The skinny
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