Bank Reserves and Treasury Notes

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davefess's picture
Joined: 06/14/2011
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Bank Reserves and Treasury Notes

There has been much discussion over who is going to buy Treasury Notes once the Fed exits QE2. One school of thought is that the banks would pick up the tab as a condition of their bailout. The below graph is bank reserves measured in billions, so I ask, is it really out of the realm of possibility. The current interest rate on bank reserves is .25% and has been for a long time. Why hang onto this cash for only a 1/4 of a percent? Could it be to buy bonds later?


Edited by admin on 11/08/2014 - 06:07


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